Correlation Between KYUSHU EL and EVS Broadcast

Can any of the company-specific risk be diversified away by investing in both KYUSHU EL and EVS Broadcast 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 KYUSHU EL and EVS Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KYUSHU EL PWR and EVS Broadcast Equipment, you can compare the effects of market volatilities on KYUSHU EL and EVS Broadcast 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 KYUSHU EL with a short position of EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of KYUSHU EL and EVS Broadcast.

Diversification Opportunities for KYUSHU EL and EVS Broadcast

-0.75

Correlation Coefficient

KYUSHU EL  EVS Broadcast

Pay attention - limited upside

The 3 months correlation between KYUSHU and EVS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KYUSHU EL PWR and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment and KYUSHU EL 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 KYUSHU EL PWR are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of KYUSHU EL i.e., KYUSHU EL and EVS Broadcast go up and down completely randomly.

Pair Corralation between KYUSHU EL and EVS Broadcast

Assuming the 90 days horizon KYUSHU EL PWR is expected to under-perform the EVS Broadcast. In addition to that, KYUSHU EL is 2.03 times more volatile than EVS Broadcast Equipment. It trades about -0.07 of its total potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.21 per unit of volatility. If you would invest  2,751  in EVS Broadcast Equipment on October 7, 2024 and sell it today you would earn a total of  324.00  from holding EVS Broadcast Equipment or generate 11.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KYUSHU EL PWR  vs.  EVS Broadcast Equipment

KYUSHU EL PWR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KYUSHU EL PWR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EVS Broadcast Equipment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KYUSHU EL and EVS Broadcast

The main advantage of trading using opposite KYUSHU EL and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KYUSHU EL position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.

The idea behind KYUSHU EL PWR and EVS Broadcast Equipment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.