Correlation Between K Electric and Atlas Insurance
Can any of the company-specific risk be diversified away by investing in both K Electric and Atlas Insurance 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 K Electric and Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K Electric and Atlas Insurance, you can compare the effects of market volatilities on K Electric and Atlas Insurance 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 K Electric with a short position of Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Electric and Atlas Insurance.
Diversification Opportunities for K Electric and Atlas Insurance
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KEL and Atlas is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding K Electric and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Insurance and K 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 K Electric are associated (or correlated) with Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of K Electric i.e., K Electric and Atlas Insurance go up and down completely randomly.
Pair Corralation between K Electric and Atlas Insurance
Assuming the 90 days trading horizon K Electric is expected to generate 1.05 times less return on investment than Atlas Insurance. In addition to that, K Electric is 2.08 times more volatile than Atlas Insurance. It trades about 0.22 of its total potential returns per unit of risk. Atlas Insurance is currently generating about 0.48 per unit of volatility. If you would invest 4,576 in Atlas Insurance on September 2, 2024 and sell it today you would earn a total of 1,024 from holding Atlas Insurance or generate 22.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
K Electric vs. Atlas Insurance
Performance |
| Timeline |
| K Electric |
| Atlas Insurance |
K Electric and Atlas Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K Electric and Atlas Insurance
The main advantage of trading using opposite K Electric and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K Electric position performs unexpectedly, Atlas Insurance 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.| K Electric vs. Atlas Insurance | K Electric vs. Meezan Bank | K Electric vs. Pakistan Aluminium Beverage | K Electric vs. United Insurance |
| Atlas Insurance vs. Habib Bank | Atlas Insurance vs. National Bank of | Atlas Insurance vs. United Bank | Atlas Insurance vs. MCB Bank |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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