Correlation Between Bluebik Group and KCE Electronics

Can any of the company-specific risk be diversified away by investing in both Bluebik Group 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 Bluebik Group and KCE Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bluebik Group PCL and KCE Electronics Public, you can compare the effects of market volatilities on Bluebik Group 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 Bluebik Group with a short position of KCE Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluebik Group and KCE Electronics.

Diversification Opportunities for Bluebik Group and KCE Electronics

-0.54

Correlation Coefficient

Bluebik Group  KCE Electronics

Excellent diversification

The 3 months correlation between Bluebik and KCE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bluebik Group PCL 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 Bluebik Group 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 Bluebik Group PCL 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 Bluebik Group i.e., Bluebik Group and KCE Electronics go up and down completely randomly.

Pair Corralation between Bluebik Group and KCE Electronics

Assuming the 90 days trading horizon Bluebik Group PCL is expected to under-perform the KCE Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Bluebik Group PCL is 1.4 times less risky than KCE Electronics. The stock trades about -0.12 of its potential returns per unit of risk. The KCE Electronics Public is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,575  in KCE Electronics Public on September 26, 2024 and sell it today you would lose (85.00) from holding KCE Electronics Public or give up 3.3% of portfolio value over 90 days.

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

Bluebik Group PCL  vs.  KCE Electronics Public

Bluebik Group PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluebik Group PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bluebik Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

KCE Electronics Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KCE Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bluebik Group and KCE Electronics

The main advantage of trading using opposite Bluebik Group and KCE Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluebik Group 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.

The idea behind Bluebik Group PCL and KCE Electronics Public 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.