Correlation Between KOBE STEEL and Power Assets
Can any of the company-specific risk be diversified away by investing in both KOBE STEEL and Power Assets 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 KOBE STEEL and Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KOBE STEEL LTD and Power Assets Holdings, you can compare the effects of market volatilities on KOBE STEEL and Power Assets 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 KOBE STEEL with a short position of Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOBE STEEL and Power Assets.
Diversification Opportunities for KOBE STEEL and Power Assets
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KOBE and Power is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and KOBE STEEL 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 KOBE STEEL LTD are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of KOBE STEEL i.e., KOBE STEEL and Power Assets go up and down completely randomly.
Pair Corralation between KOBE STEEL and Power Assets
Assuming the 90 days trading horizon KOBE STEEL is expected to generate 1.34 times less return on investment than Power Assets. In addition to that, KOBE STEEL is 1.37 times more volatile than Power Assets Holdings. It trades about 0.13 of its total potential returns per unit of risk. Power Assets Holdings is currently generating about 0.24 per unit of volatility. If you would invest 620.00 in Power Assets Holdings on October 15, 2024 and sell it today you would earn a total of 30.00 from holding Power Assets Holdings or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KOBE STEEL LTD vs. Power Assets Holdings
Performance |
| Timeline |
| KOBE STEEL LTD |
| Power Assets Holdings |
KOBE STEEL and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOBE STEEL and Power Assets
The main advantage of trading using opposite KOBE STEEL and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOBE STEEL position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.The idea behind KOBE STEEL LTD and Power Assets Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Power Assets vs. Xiwang Special Steel | Power Assets vs. KOBE STEEL LTD | Power Assets vs. Khiron Life Sciences | Power Assets vs. TRADEDOUBLER AB SK |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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