Correlation Between Wah Nobel and K Electric
Can any of the company-specific risk be diversified away by investing in both Wah Nobel 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 Wah Nobel and K Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Nobel Chemicals and K Electric, you can compare the effects of market volatilities on Wah Nobel 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 Wah Nobel with a short position of K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and K Electric.
Diversification Opportunities for Wah Nobel and K Electric
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wah and KEL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric and Wah Nobel 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 Wah Nobel Chemicals 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 Wah Nobel i.e., Wah Nobel and K Electric go up and down completely randomly.
Pair Corralation between Wah Nobel and K Electric
Assuming the 90 days trading horizon Wah Nobel Chemicals is expected to under-perform the K Electric. In addition to that, Wah Nobel is 1.2 times more volatile than K Electric. It trades about -0.38 of its total potential returns per unit of risk. K Electric is currently generating about -0.32 per unit of volatility. If you would invest 569.00 in K Electric on October 24, 2024 and sell it today you would lose (91.00) from holding K Electric or give up 15.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. K Electric
Performance |
| Timeline |
| Wah Nobel Chemicals |
| K Electric |
Wah Nobel and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and K Electric
The main advantage of trading using opposite Wah Nobel and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel 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.| Wah Nobel vs. Shifa International Hospitals | Wah Nobel vs. Air Link Communication | Wah Nobel vs. Fauji Foods | Wah Nobel vs. Hi Tech Lubricants |
| K Electric vs. Askari General Insurance | K Electric vs. IGI Life Insurance | K Electric vs. Sardar Chemical Industries | K Electric vs. Wah Nobel Chemicals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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