Correlation Between KCE Electronics and Carabao Group
Can any of the company-specific risk be diversified away by investing in both KCE Electronics and Carabao Group 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 KCE Electronics and Carabao Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCE Electronics Public and Carabao Group Public, you can compare the effects of market volatilities on KCE Electronics and Carabao Group 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 KCE Electronics with a short position of Carabao Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCE Electronics and Carabao Group.
Diversification Opportunities for KCE Electronics and Carabao Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KCE and Carabao is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KCE Electronics Public and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and KCE Electronics 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 KCE Electronics Public are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of KCE Electronics i.e., KCE Electronics and Carabao Group go up and down completely randomly.
Pair Corralation between KCE Electronics and Carabao Group
Assuming the 90 days trading horizon KCE Electronics Public is expected to generate 1.04 times more return on investment than Carabao Group. However, KCE Electronics is 1.04 times more volatile than Carabao Group Public. It trades about -0.15 of its potential returns per unit of risk. Carabao Group Public is currently generating about -0.19 per unit of risk. If you would invest 2,250 in KCE Electronics Public on November 27, 2024 and sell it today you would lose (190.00) from holding KCE Electronics Public or give up 8.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCE Electronics Public vs. Carabao Group Public
Performance |
| Timeline |
| KCE Electronics Public |
| Carabao Group Public |
KCE Electronics and Carabao Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCE Electronics and Carabao Group
The main advantage of trading using opposite KCE Electronics and Carabao Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCE Electronics position performs unexpectedly, Carabao Group 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 Carabao Group will offset losses from the drop in Carabao Group's long position.| KCE Electronics vs. Hana Microelectronics Public | KCE Electronics vs. Kasikornbank Public | KCE Electronics vs. Land and Houses | KCE Electronics vs. Indorama Ventures PCL |
| Carabao Group vs. CP ALL Public | Carabao Group vs. Minor International Public | Carabao Group vs. Srisawad Power 1979 | Carabao Group vs. Home Product Center |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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