Correlation Between Premier Insurance and K Electric
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and K Electric 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 Premier Insurance and K Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and K Electric, you can compare the effects of market volatilities on Premier Insurance and K Electric 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 Premier Insurance with a short position of K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and K Electric.
Diversification Opportunities for Premier Insurance and K Electric
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and KEL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric and Premier Insurance 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 Premier Insurance are associated (or correlated) with K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Premier Insurance i.e., Premier Insurance and K Electric go up and down completely randomly.
Pair Corralation between Premier Insurance and K Electric
Assuming the 90 days trading horizon Premier Insurance is expected to generate 1.14 times less return on investment than K Electric. In addition to that, Premier Insurance is 1.97 times more volatile than K Electric. It trades about 0.03 of its total potential returns per unit of risk. K Electric is currently generating about 0.07 per unit of volatility. If you would invest 245.00 in K Electric on September 14, 2024 and sell it today you would earn a total of 389.00 from holding K Electric or generate 158.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 66.32% |
| Values | Daily Returns |
Premier Insurance vs. K Electric
Performance |
| Timeline |
| Premier Insurance |
| K Electric |
Premier Insurance and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and K Electric
The main advantage of trading using opposite Premier Insurance and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Premier Insurance vs. JS Investments | Premier Insurance vs. MCB Investment Manag | Premier Insurance vs. Security Investment Bank | Premier Insurance vs. Nimir Industrial Chemical |
| K Electric vs. Pakistan State Oil | K Electric vs. Oil and Gas | K Electric vs. Lucky Cement | K Electric vs. Engro |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |