Correlation Between Kansai Electric and United Utilities
Can any of the company-specific risk be diversified away by investing in both Kansai Electric and United Utilities 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 Kansai Electric and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Kansai Electric and United Utilities Group, you can compare the effects of market volatilities on Kansai Electric and United Utilities 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 Kansai Electric with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kansai Electric and United Utilities.
Diversification Opportunities for Kansai Electric and United Utilities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kansai and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Kansai Electric and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Kansai Electric 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 The Kansai Electric are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Kansai Electric i.e., Kansai Electric and United Utilities go up and down completely randomly.
Pair Corralation between Kansai Electric and United Utilities
Assuming the 90 days horizon The Kansai Electric is expected to generate 1.22 times more return on investment than United Utilities. However, Kansai Electric is 1.22 times more volatile than United Utilities Group. It trades about 0.15 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.02 per unit of risk. If you would invest 1,194 in The Kansai Electric on September 12, 2024 and sell it today you would earn a total of 354.00 from holding The Kansai Electric or generate 29.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 72.26% |
| Values | Daily Returns |
The Kansai Electric vs. United Utilities Group
Performance |
| Timeline |
| Kansai Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| United Utilities |
Kansai Electric and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kansai Electric and United Utilities
The main advantage of trading using opposite Kansai Electric and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kansai Electric position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Kansai Electric vs. United Utilities Group | Kansai Electric vs. JBG SMITH Properties | Kansai Electric vs. Hooker Furniture | Kansai Electric vs. Live Ventures |
| United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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