Correlation Between KCE EL and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both KCE EL and Plexus Corp 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 EL and Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCE EL PCL and Plexus Corp, you can compare the effects of market volatilities on KCE EL and Plexus Corp 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 EL with a short position of Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCE EL and Plexus Corp.
Diversification Opportunities for KCE EL and Plexus Corp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KCE and Plexus is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding KCE EL PCL and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp and KCE EL 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 EL PCL are associated (or correlated) with Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of KCE EL i.e., KCE EL and Plexus Corp go up and down completely randomly.
Pair Corralation between KCE EL and Plexus Corp
Assuming the 90 days trading horizon KCE EL PCL is expected to under-perform the Plexus Corp. In addition to that, KCE EL is 1.24 times more volatile than Plexus Corp. It trades about -0.41 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.24 per unit of volatility. If you would invest 13,300 in Plexus Corp on September 2, 2024 and sell it today you would earn a total of 1,900 from holding Plexus Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCE EL PCL vs. Plexus Corp
Performance |
| Timeline |
| KCE EL PCL |
| Plexus Corp |
KCE EL and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCE EL and Plexus Corp
The main advantage of trading using opposite KCE EL and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCE EL position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| KCE EL vs. HK Electric Investments | KCE EL vs. REGAL ASIAN INVESTMENTS | KCE EL vs. Strategic Investments AS | KCE EL vs. Axcelis Technologies |
| Plexus Corp vs. MGIC INVESTMENT | Plexus Corp vs. NXP Semiconductors NV | Plexus Corp vs. EAT WELL INVESTMENT | Plexus Corp vs. Apollo Investment Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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