Correlation Between KGI Securities and Eastern Commercial

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

Diversification Opportunities for KGI Securities and Eastern Commercial

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between KGI and Eastern is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KGI Securities Public and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and KGI Securities 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 KGI Securities Public are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of KGI Securities i.e., KGI Securities and Eastern Commercial go up and down completely randomly.

Pair Corralation between KGI Securities and Eastern Commercial

Assuming the 90 days trading horizon KGI Securities is expected to generate 414.63 times less return on investment than Eastern Commercial. But when comparing it to its historical volatility, KGI Securities Public is 74.35 times less risky than Eastern Commercial. It trades about 0.01 of its potential returns per unit of risk. Eastern Commercial Leasing is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  151.00  in Eastern Commercial Leasing on September 14, 2024 and sell it today you would lose (45.00) from holding Eastern Commercial Leasing or give up 29.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KGI Securities Public  vs.  Eastern Commercial Leasing

 Performance 
       Timeline  
KGI Securities Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KGI Securities Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Eastern Commercial 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Commercial Leasing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Eastern Commercial disclosed solid returns over the last few months and may actually be approaching a breakup point.

KGI Securities and Eastern Commercial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KGI Securities and Eastern Commercial

The main advantage of trading using opposite KGI Securities and Eastern Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGI Securities position performs unexpectedly, Eastern Commercial 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 Eastern Commercial will offset losses from the drop in Eastern Commercial's long position.
The idea behind KGI Securities Public and Eastern Commercial Leasing 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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