Correlation Between CEZ A and Kansai Electric
Can any of the company-specific risk be diversified away by investing in both CEZ A 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 CEZ A and Kansai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ A S and Kansai Electric Power, you can compare the effects of market volatilities on CEZ A 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 CEZ A with a short position of Kansai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and Kansai Electric.
Diversification Opportunities for CEZ A and Kansai Electric
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CEZ and Kansai is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CEZ A S 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 CEZ A 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 CEZ A S 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 CEZ A i.e., CEZ A and Kansai Electric go up and down completely randomly.
Pair Corralation between CEZ A and Kansai Electric
If you would invest 544.00 in Kansai Electric Power on October 25, 2024 and sell it today you would lose (5.00) from holding Kansai Electric Power or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.56% |
| Values | Daily Returns |
CEZ A S vs. Kansai Electric Power
Performance |
| Timeline |
| CEZ A S |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kansai Electric Power |
CEZ A and Kansai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ A and Kansai Electric
The main advantage of trading using opposite CEZ A and Kansai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ A 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.| CEZ A vs. NH Foods Ltd | CEZ A vs. Bridgford Foods | CEZ A vs. Acumen Pharmaceuticals | CEZ A vs. Willamette Valley Vineyards |
| Kansai Electric vs. Wind Works Power | Kansai Electric vs. Alternus Energy Group | Kansai Electric vs. Mass Megawat Wind | Kansai Electric vs. Enlight Renewable Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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