Correlation Between Cal Comp and KCE Electronics

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

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

Diversification Opportunities for Cal Comp and KCE Electronics

0.93

Correlation Coefficient

Cal Comp  KCE Electronics

Almost no diversification

The 3 months correlation between Cal and KCE is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cal Comp Electronics Public 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 Cal Comp 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 Cal Comp Electronics Public 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 Cal Comp i.e., Cal Comp and KCE Electronics go up and down completely randomly.

Pair Corralation between Cal Comp and KCE Electronics

Assuming the 90 days trading horizon Cal Comp Electronics Public is expected to under-perform the KCE Electronics. In addition to that, Cal Comp is 1.41 times more volatile than KCE Electronics Public. It trades about -0.14 of its total potential returns per unit of risk. KCE Electronics Public is currently generating about -0.17 per unit of volatility. If you would invest  2,391  in KCE Electronics Public on December 28, 2024 and sell it today you would lose (671.00) from holding KCE Electronics Public or give up 28.06% of portfolio value over 90 days.

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

Cal Comp Electronics Public  vs.  KCE Electronics Public

Cal Comp Electronics

Risk-Adjusted Performance

Very Weak

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

KCE Electronics Public

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cal Comp and KCE Electronics

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

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.