Correlation Between JS Investments and K Electric
Can any of the company-specific risk be diversified away by investing in both JS Investments and K 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 JS Investments and K Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and K Electric, you can compare the effects of market volatilities on JS Investments and K 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 JS Investments with a short position of K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and K Electric.
Diversification Opportunities for JS Investments and K Electric
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JSIL and KEL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric and JS Investments 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 JS Investments are associated (or correlated) with K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of JS Investments i.e., JS Investments and K Electric go up and down completely randomly.
Pair Corralation between JS Investments and K Electric
Assuming the 90 days trading horizon JS Investments is expected to generate 1.56 times less return on investment than K Electric. In addition to that, JS Investments is 1.03 times more volatile than K Electric. It trades about 0.06 of its total potential returns per unit of risk. K Electric is currently generating about 0.1 per unit of volatility. If you would invest 201.00 in K Electric on September 12, 2024 and sell it today you would earn a total of 390.00 from holding K Electric or generate 194.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.3% |
| Values | Daily Returns |
JS Investments vs. K Electric
Performance |
| Timeline |
| JS Investments |
| K Electric |
JS Investments and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and K Electric
The main advantage of trading using opposite JS Investments and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, K 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 K Electric will offset losses from the drop in K Electric's long position.| JS Investments vs. Sardar Chemical Industries | JS Investments vs. Engro Polymer Chemicals | JS Investments vs. WorldCall Telecom | JS Investments vs. Pakistan Synthetics |
| K Electric vs. Reliance Insurance Co | K Electric vs. ITTEFAQ Iron Industries | K Electric vs. WorldCall Telecom | K Electric vs. Air Link Communication |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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