Correlation Between KCE Electronics and Union Petrochemical
Can any of the company-specific risk be diversified away by investing in both KCE Electronics and Union Petrochemical 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 Union Petrochemical 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 Union Petrochemical Public, you can compare the effects of market volatilities on KCE Electronics and Union Petrochemical 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 Union Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCE Electronics and Union Petrochemical.
Diversification Opportunities for KCE Electronics and Union Petrochemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KCE and Union is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KCE Electronics Public and Union Petrochemical Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Petrochemical 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 Union Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Petrochemical has no effect on the direction of KCE Electronics i.e., KCE Electronics and Union Petrochemical go up and down completely randomly.
Pair Corralation between KCE Electronics and Union Petrochemical
Assuming the 90 days trading horizon KCE Electronics Public is expected to under-perform the Union Petrochemical. But the stock apears to be less risky and, when comparing its historical volatility, KCE Electronics Public is 40.07 times less risky than Union Petrochemical. The stock trades about -0.16 of its potential returns per unit of risk. The Union Petrochemical Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Union Petrochemical Public on August 29, 2024 and sell it today you would lose (20.00) from holding Union Petrochemical Public or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCE Electronics Public vs. Union Petrochemical Public
Performance |
| Timeline |
| KCE Electronics Public |
| Union Petrochemical |
KCE Electronics and Union Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCE Electronics and Union Petrochemical
The main advantage of trading using opposite KCE Electronics and Union Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCE Electronics position performs unexpectedly, Union Petrochemical 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 Union Petrochemical will offset losses from the drop in Union Petrochemical's long position.| KCE Electronics vs. AP Public | KCE Electronics vs. Jasmine International Public | KCE Electronics vs. Asia Plus Group | KCE Electronics vs. Bangchak Public |
| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. TWZ Public | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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