Correlation Between DTE Energy and Kanzhun
Can any of the company-specific risk be diversified away by investing in both DTE Energy and Kanzhun 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 DTE Energy and Kanzhun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTE Energy and Kanzhun Ltd ADR, you can compare the effects of market volatilities on DTE Energy and Kanzhun 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 DTE Energy with a short position of Kanzhun. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTE Energy and Kanzhun.
Diversification Opportunities for DTE Energy and Kanzhun
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DTE and Kanzhun is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding DTE Energy and Kanzhun Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kanzhun Ltd ADR and DTE Energy 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 DTE Energy are associated (or correlated) with Kanzhun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kanzhun Ltd ADR has no effect on the direction of DTE Energy i.e., DTE Energy and Kanzhun go up and down completely randomly.
Pair Corralation between DTE Energy and Kanzhun
Considering the 90-day investment horizon DTE Energy is expected to under-perform the Kanzhun. But the stock apears to be less risky and, when comparing its historical volatility, DTE Energy is 6.45 times less risky than Kanzhun. The stock trades about -0.14 of its potential returns per unit of risk. The Kanzhun Ltd ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,513 in Kanzhun Ltd ADR on November 29, 2024 and sell it today you would earn a total of 76.00 from holding Kanzhun Ltd ADR or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTE Energy vs. Kanzhun Ltd ADR
Performance |
| Timeline |
| DTE Energy |
| Kanzhun Ltd ADR |
DTE Energy and Kanzhun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTE Energy and Kanzhun
The main advantage of trading using opposite DTE Energy and Kanzhun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTE Energy position performs unexpectedly, Kanzhun 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 Kanzhun will offset losses from the drop in Kanzhun's long position.| DTE Energy vs. Southern Company Series | DTE Energy vs. Southern Co | DTE Energy vs. DTE Energy Co | DTE Energy vs. Affiliated Managers Group, |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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