Correlation Between Keisei Electric and Union Pacific

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Can any of the company-specific risk be diversified away by investing in both Keisei Electric and Union Pacific 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 Keisei Electric and Union Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keisei Electric Railway and Union Pacific, you can compare the effects of market volatilities on Keisei Electric and Union Pacific 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 Keisei Electric with a short position of Union Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keisei Electric and Union Pacific.

Diversification Opportunities for Keisei Electric and Union Pacific

KeiseiUnionDiversified AwayKeiseiUnionDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Keisei and Union is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Keisei Electric Railway and Union Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pacific and Keisei Electric 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 Keisei Electric Railway are associated (or correlated) with Union Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pacific has no effect on the direction of Keisei Electric i.e., Keisei Electric and Union Pacific go up and down completely randomly.

Pair Corralation between Keisei Electric and Union Pacific

Assuming the 90 days horizon Keisei Electric Railway is expected to generate 1.86 times more return on investment than Union Pacific. However, Keisei Electric is 1.86 times more volatile than Union Pacific. It trades about 0.08 of its potential returns per unit of risk. Union Pacific is currently generating about 0.13 per unit of risk. If you would invest  773.00  in Keisei Electric Railway on October 27, 2024 and sell it today you would earn a total of  92.00  from holding Keisei Electric Railway or generate 11.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Keisei Electric Railway  vs.  Union Pacific

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510152025
JavaScript chart by amCharts 3.21.15KEI UNP
       Timeline  
Keisei Electric Railway 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Keisei Electric Railway are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keisei Electric reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan88.599.5
Union Pacific 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Union Pacific are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Union Pacific may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan210215220225230235

Keisei Electric and Union Pacific Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.19-6.14-4.08-2.020.03562.144.276.418.55 0.050.100.15
JavaScript chart by amCharts 3.21.15KEI UNP
       Returns  

Pair Trading with Keisei Electric and Union Pacific

The main advantage of trading using opposite Keisei Electric and Union Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keisei Electric position performs unexpectedly, Union Pacific 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 Union Pacific will offset losses from the drop in Union Pacific's long position.
The idea behind Keisei Electric Railway and Union Pacific 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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