Correlation Between KCE EL and TTM Technologies

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

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

Diversification Opportunities for KCE EL and TTM Technologies

-0.92

Correlation Coefficient

KCE EL  TTM Technologies

Pay attention - limited upside

The 3 months correlation between KCE and TTM is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding KCE EL PCL and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies and KCE EL 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 KCE EL PCL are associated (or correlated) with TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of KCE EL i.e., KCE EL and TTM Technologies go up and down completely randomly.

Pair Corralation between KCE EL and TTM Technologies

Assuming the 90 days trading horizon KCE EL PCL is expected to under-perform the TTM Technologies. In addition to that, KCE EL is 1.26 times more volatile than TTM Technologies. It trades about -0.28 of its total potential returns per unit of risk. TTM Technologies is currently generating about 0.26 per unit of volatility. If you would invest  1,750  in TTM Technologies on September 22, 2024 and sell it today you would earn a total of  610.00  from holding TTM Technologies or generate 34.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.78%
Values	Daily Returns

KCE EL PCL  vs.  TTM Technologies

KCE EL PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KCE EL PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TTM Technologies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TTM Technologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TTM Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KCE EL and TTM Technologies

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

The idea behind KCE EL PCL and TTM Technologies 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.