Correlation Between CAIRN HOMES and KCE EL

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

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

Diversification Opportunities for CAIRN HOMES and KCE EL

0.58

Correlation Coefficient

CAIRN HOMES  KCE EL

Very weak diversification

The 3 months correlation between CAIRN and KCE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and KCE EL PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCE EL PCL and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with KCE EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCE EL PCL has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and KCE EL go up and down completely randomly.

Pair Corralation between CAIRN HOMES and KCE EL

Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 0.69 times more return on investment than KCE EL. However, CAIRN HOMES EO is 1.44 times less risky than KCE EL. It trades about -0.08 of its potential returns per unit of risk. KCE EL PCL is currently generating about -0.11 per unit of risk. If you would invest  227.00  in CAIRN HOMES EO on December 19, 2024 and sell it today you would lose (26.00) from holding CAIRN HOMES EO or give up 11.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

CAIRN HOMES EO  vs.  KCE EL PCL

CAIRN HOMES EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KCE EL PCL

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CAIRN HOMES and KCE EL

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

The idea behind CAIRN HOMES EO and KCE EL PCL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.