Correlation Between SSE PLC and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both SSE PLC 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 SSE PLC and KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSE PLC ADR and KYUSHU EL PWR, you can compare the effects of market volatilities on SSE PLC 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 SSE PLC with a short position of KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSE PLC and KYUSHU EL.
Diversification Opportunities for SSE PLC and KYUSHU EL
Poor diversification
The 3 months correlation between SSE and KYUSHU is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SSE PLC ADR 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 SSE PLC 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 SSE PLC ADR 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 SSE PLC i.e., SSE PLC and KYUSHU EL go up and down completely randomly.
Pair Corralation between SSE PLC and KYUSHU EL
Assuming the 90 days trading horizon SSE PLC ADR is expected to generate 0.5 times more return on investment than KYUSHU EL. However, SSE PLC ADR is 1.98 times less risky than KYUSHU EL. It trades about -0.08 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about -0.06 per unit of risk. If you would invest 2,140 in SSE PLC ADR on September 13, 2024 and sell it today you would lose (120.00) from holding SSE PLC ADR or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSE PLC ADR vs. KYUSHU EL PWR
Performance |
| Timeline |
| SSE PLC ADR |
| KYUSHU EL PWR |
SSE PLC and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSE PLC and KYUSHU EL
The main advantage of trading using opposite SSE PLC and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSE PLC 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.| SSE PLC vs. Electronic Arts | SSE PLC vs. National Retail Properties | SSE PLC vs. Nucletron Electronic Aktiengesellschaft | SSE PLC vs. RETAIL FOOD GROUP |
| KYUSHU EL vs. JSC Halyk bank | KYUSHU EL vs. QBE Insurance Group | KYUSHU EL vs. VIRG NATL BANKSH | KYUSHU EL vs. MBANK |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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