Correlation Between Universal and Kansai Electric
Can any of the company-specific risk be diversified away by investing in both Universal and Kansai 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 Universal and Kansai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and The Kansai Electric, you can compare the effects of market volatilities on Universal and Kansai 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 Universal with a short position of Kansai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Kansai Electric.
Diversification Opportunities for Universal and Kansai Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Kansai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Universal and The Kansai Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansai Electric and Universal 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 Universal are associated (or correlated) with Kansai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansai Electric has no effect on the direction of Universal i.e., Universal and Kansai Electric go up and down completely randomly.
Pair Corralation between Universal and Kansai Electric
Considering the 90-day investment horizon Universal is expected to generate 12.53 times less return on investment than Kansai Electric. But when comparing it to its historical volatility, Universal is 1.22 times less risky than Kansai Electric. It trades about 0.01 of its potential returns per unit of risk. The Kansai Electric is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,367 in The Kansai Electric on September 4, 2024 and sell it today you would earn a total of 181.00 from holding The Kansai Electric or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 46.15% |
| Values | Daily Returns |
Universal vs. The Kansai Electric
Performance |
| Timeline |
| Universal |
| Kansai Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Universal and Kansai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Kansai Electric
The main advantage of trading using opposite Universal and Kansai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, Kansai 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 Kansai Electric will offset losses from the drop in Kansai Electric's long position.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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