Correlation Between Kansai Electric and Astra Energy
Can any of the company-specific risk be diversified away by investing in both Kansai Electric and Astra Energy 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 Astra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kansai Electric Power and Astra Energy, you can compare the effects of market volatilities on Kansai Electric and Astra Energy 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 Astra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kansai Electric and Astra Energy.
Diversification Opportunities for Kansai Electric and Astra Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kansai and Astra is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kansai Electric Power and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy 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 Kansai Electric Power are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Kansai Electric i.e., Kansai Electric and Astra Energy go up and down completely randomly.
Pair Corralation between Kansai Electric and Astra Energy
Assuming the 90 days horizon Kansai Electric is expected to generate 3.14 times less return on investment than Astra Energy. But when comparing it to its historical volatility, Kansai Electric Power is 2.73 times less risky than Astra Energy. It trades about 0.03 of its potential returns per unit of risk. Astra Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Astra Energy on October 24, 2024 and sell it today you would lose (13.00) from holding Astra Energy or give up 54.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.6% |
Values | Daily Returns |
Kansai Electric Power vs. Astra Energy
Performance |
Timeline |
Kansai Electric Power |
Astra Energy |
Kansai Electric and Astra Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kansai Electric and Astra Energy
The main advantage of trading using opposite Kansai Electric and Astra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kansai Electric position performs unexpectedly, Astra Energy 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 Astra Energy will offset losses from the drop in Astra Energy's long position.Kansai Electric vs. Wind Works Power | Kansai Electric vs. Alternus Energy Group | Kansai Electric vs. Mass Megawat Wind | Kansai Electric vs. Enlight Renewable Energy |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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