Correlation Between Lendlease and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both Lendlease and KYUSHU EL 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 Lendlease and KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and KYUSHU EL PWR, you can compare the effects of market volatilities on Lendlease and KYUSHU EL 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 Lendlease with a short position of KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and KYUSHU EL.
Diversification Opportunities for Lendlease and KYUSHU EL
Modest diversification
The 3 months correlation between Lendlease and KYUSHU is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR and Lendlease 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 Lendlease Group are associated (or correlated) with KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of Lendlease i.e., Lendlease and KYUSHU EL go up and down completely randomly.
Pair Corralation between Lendlease and KYUSHU EL
Assuming the 90 days trading horizon Lendlease is expected to generate 8.38 times less return on investment than KYUSHU EL. But when comparing it to its historical volatility, Lendlease Group is 1.09 times less risky than KYUSHU EL. It trades about 0.01 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 472.00 in KYUSHU EL PWR on September 4, 2024 and sell it today you would earn a total of 473.00 from holding KYUSHU EL PWR or generate 100.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. KYUSHU EL PWR
Performance |
| Timeline |
| Lendlease Group |
| KYUSHU EL PWR |
Lendlease and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and KYUSHU EL
The main advantage of trading using opposite Lendlease and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.The idea behind Lendlease Group and KYUSHU EL PWR 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.| KYUSHU EL vs. Cal Maine Foods | KYUSHU EL vs. INDOFOOD AGRI RES | KYUSHU EL vs. TYSON FOODS A | KYUSHU EL vs. SENECA FOODS A |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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