Correlation Between Electronic Arts and KENEDIX OFFICE

Can any of the company-specific risk be diversified away by investing in both Electronic Arts and KENEDIX OFFICE 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 Electronic Arts and KENEDIX OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electronic Arts and KENEDIX OFFICE INV, you can compare the effects of market volatilities on Electronic Arts and KENEDIX OFFICE 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 Electronic Arts with a short position of KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and KENEDIX OFFICE.

Diversification Opportunities for Electronic Arts and KENEDIX OFFICE

-0.44

Correlation Coefficient

Electronic Arts  KENEDIX OFFICE

Very good diversification

The 3 months correlation between Electronic and KENEDIX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV and Electronic Arts 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 Electronic Arts are associated (or correlated) with KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of Electronic Arts i.e., Electronic Arts and KENEDIX OFFICE go up and down completely randomly.

Pair Corralation between Electronic Arts and KENEDIX OFFICE

Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.1 times more return on investment than KENEDIX OFFICE. However, Electronic Arts is 1.1 times more volatile than KENEDIX OFFICE INV. It trades about 0.05 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about -0.03 per unit of risk. If you would invest  11,260  in Electronic Arts on September 20, 2024 and sell it today you would earn a total of  3,358  from holding Electronic Arts or generate 29.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.69%
Values	Daily Returns

Electronic Arts  vs.  KENEDIX OFFICE INV

Electronic Arts

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Electronic Arts unveiled solid returns over the last few months and may actually be approaching a breakup point.

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KENEDIX OFFICE INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Electronic Arts and KENEDIX OFFICE

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

The idea behind Electronic Arts and KENEDIX OFFICE INV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.