Correlation Between KCE Electronics and Energy Absolute
Can any of the company-specific risk be diversified away by investing in both KCE Electronics and Energy Absolute 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 Energy Absolute 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 Energy Absolute Public, you can compare the effects of market volatilities on KCE Electronics and Energy Absolute 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 Energy Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCE Electronics and Energy Absolute.
Diversification Opportunities for KCE Electronics and Energy Absolute
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KCE and Energy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KCE Electronics Public and Energy Absolute Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Absolute 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 Energy Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Absolute Public has no effect on the direction of KCE Electronics i.e., KCE Electronics and Energy Absolute go up and down completely randomly.
Pair Corralation between KCE Electronics and Energy Absolute
Assuming the 90 days trading horizon KCE Electronics Public is expected to generate 0.52 times more return on investment than Energy Absolute. However, KCE Electronics Public is 1.94 times less risky than Energy Absolute. It trades about -0.04 of its potential returns per unit of risk. Energy Absolute Public is currently generating about -0.1 per unit of risk. If you would invest 4,679 in KCE Electronics Public on August 26, 2024 and sell it today you would lose (2,054) from holding KCE Electronics Public or give up 43.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
KCE Electronics Public vs. Energy Absolute Public
Performance |
| Timeline |
| KCE Electronics Public |
| Energy Absolute Public |
KCE Electronics and Energy Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCE Electronics and Energy Absolute
The main advantage of trading using opposite KCE Electronics and Energy Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCE Electronics position performs unexpectedly, Energy Absolute 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 Energy Absolute will offset losses from the drop in Energy Absolute's long position.| KCE Electronics vs. AP Public | KCE Electronics vs. Jasmine International Public | KCE Electronics vs. Asia Plus Group | KCE Electronics vs. Bangkok Aviation Fuel |
| Energy Absolute vs. PTT Oil and | Energy Absolute vs. Power Solution Technologies | Energy Absolute vs. Star Petroleum Refining | Energy Absolute vs. Prima Marine Public |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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