Correlation Between Land and KCE Electronics
Can any of the company-specific risk be diversified away by investing in both Land and KCE Electronics 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 Land and KCE Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Land and Houses and KCE Electronics Public, you can compare the effects of market volatilities on Land and KCE Electronics 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 Land with a short position of KCE Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and KCE Electronics.
Diversification Opportunities for Land and KCE Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Land and KCE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and KCE Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCE Electronics Public and Land 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 Land and Houses are associated (or correlated) with KCE Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCE Electronics Public has no effect on the direction of Land i.e., Land and KCE Electronics go up and down completely randomly.
Pair Corralation between Land and KCE Electronics
Assuming the 90 days horizon Land and Houses is expected to under-perform the KCE Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Land and Houses is 1.62 times less risky than KCE Electronics. The stock trades about -0.24 of its potential returns per unit of risk. The KCE Electronics Public is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,380 in KCE Electronics Public on November 4, 2024 and sell it today you would lose (180.00) from holding KCE Electronics Public or give up 7.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Land and Houses vs. KCE Electronics Public
Performance |
| Timeline |
| Land and Houses |
| KCE Electronics Public |
Land and KCE Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Land and KCE Electronics
The main advantage of trading using opposite Land and KCE Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Land position performs unexpectedly, KCE Electronics 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 KCE Electronics will offset losses from the drop in KCE Electronics' long position.The idea behind Land and Houses and KCE Electronics Public 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.| KCE Electronics vs. Hana Microelectronics Public | KCE Electronics vs. Kasikornbank Public | KCE Electronics vs. Land and Houses | KCE Electronics vs. Indorama Ventures PCL |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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