Correlation Between Engie SA and Kko International

Can any of the company-specific risk be diversified away by investing in both Engie SA and Kko International 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 Engie SA and Kko International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Engie SA and Kko International SA, you can compare the effects of market volatilities on Engie SA and Kko International 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 Engie SA with a short position of Kko International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie SA and Kko International.

Diversification Opportunities for Engie SA and Kko International

-0.71

Correlation Coefficient

Engie SA  Kko International

Pay attention - limited upside

The 3 months correlation between Engie and Kko is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA and Kko International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kko International and Engie SA 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 Engie SA are associated (or correlated) with Kko International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kko International has no effect on the direction of Engie SA i.e., Engie SA and Kko International go up and down completely randomly.

Pair Corralation between Engie SA and Kko International

Assuming the 90 days trading horizon Engie SA is expected to generate 15.91 times less return on investment than Kko International. But when comparing it to its historical volatility, Engie SA is 6.49 times less risky than Kko International. It trades about 0.21 of its potential returns per unit of risk. Kko International SA is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Kko International SA on October 5, 2024 and sell it today you would earn a total of  8.00  from holding Kko International SA or generate 72.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Engie SA  vs.  Kko International SA

Engie SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Engie SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Engie SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kko International

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kko International SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kko International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Engie SA and Kko International

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

The idea behind Engie SA and Kko International SA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.