Correlation Between Union Petrochemical and KCE Electronics
Can any of the company-specific risk be diversified away by investing in both Union Petrochemical 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 Union Petrochemical and KCE Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Petrochemical Public and KCE Electronics Public, you can compare the effects of market volatilities on Union Petrochemical 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 Union Petrochemical with a short position of KCE Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Petrochemical and KCE Electronics.
Diversification Opportunities for Union Petrochemical and KCE Electronics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and KCE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Union Petrochemical Public 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 Union Petrochemical 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 Union Petrochemical Public 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 Union Petrochemical i.e., Union Petrochemical and KCE Electronics go up and down completely randomly.
Pair Corralation between Union Petrochemical and KCE Electronics
Assuming the 90 days trading horizon Union Petrochemical Public is expected to generate 40.07 times more return on investment than KCE Electronics. However, Union Petrochemical is 40.07 times more volatile than KCE Electronics Public. It trades about 0.08 of its potential returns per unit of risk. KCE Electronics Public is currently generating about -0.16 per unit of risk. If you would invest 88.00 in Union Petrochemical Public on August 29, 2024 and sell it today you would lose (20.00) from holding Union Petrochemical Public or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Petrochemical Public vs. KCE Electronics Public
Performance |
| Timeline |
| Union Petrochemical |
| KCE Electronics Public |
Union Petrochemical and KCE Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Petrochemical and KCE Electronics
The main advantage of trading using opposite Union Petrochemical and KCE Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Petrochemical 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.| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. TWZ Public | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel Public |
| KCE Electronics vs. AP Public | KCE Electronics vs. Jasmine International Public | KCE Electronics vs. Asia Plus Group | KCE Electronics vs. Bangchak Public |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |