Correlation Between Confluent and Kansai Electric
Can any of the company-specific risk be diversified away by investing in both Confluent and Kansai Electric at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Confluent and Kansai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Confluent and Kansai Electric Power, you can compare the effects of market volatilities on Confluent and Kansai Electric and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Confluent with a short position of Kansai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and Kansai Electric.
Diversification Opportunities for Confluent and Kansai Electric
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Confluent and Kansai is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Kansai Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansai Electric Power and Confluent is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Confluent are associated (or correlated) with Kansai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansai Electric Power has no effect on the direction of Confluent i.e., Confluent and Kansai Electric go up and down completely randomly.
Pair Corralation between Confluent and Kansai Electric
Given the investment horizon of 90 days Confluent is expected to generate 0.8 times more return on investment than Kansai Electric. However, Confluent is 1.26 times less risky than Kansai Electric. It trades about 0.35 of its potential returns per unit of risk. Kansai Electric Power is currently generating about -0.26 per unit of risk. If you would invest 2,307 in Confluent on August 31, 2024 and sell it today you would earn a total of 750.00 from holding Confluent or generate 32.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Confluent vs. Kansai Electric Power
Performance |
| Timeline |
| Confluent |
| Kansai Electric Power |
Confluent and Kansai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Confluent and Kansai Electric
The main advantage of trading using opposite Confluent and Kansai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent position performs unexpectedly, Kansai Electric can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kansai Electric will offset losses from the drop in Kansai Electric's long position.| Confluent vs. DigitalOcean Holdings | Confluent vs. Doximity | Confluent vs. Gitlab Inc | Confluent vs. Global E Online |
| Kansai Electric vs. Constellation Energy Corp | Kansai Electric vs. Orsted AS ADR | Kansai Electric vs. HUMANA INC | Kansai Electric vs. Aquagold International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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