Correlation Between Resource America and Kansai Electric

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

Diversification Opportunities for Resource America and Kansai Electric

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Resource and Kansai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Resource America and Kansai Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansai Electric Power and Resource America 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 Resource America are associated (or correlated) with Kansai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansai Electric Power has no effect on the direction of Resource America i.e., Resource America and Kansai Electric go up and down completely randomly.

Pair Corralation between Resource America and Kansai Electric

If you would invest  612.00  in Kansai Electric Power on December 30, 2023 and sell it today you would earn a total of  25.00  from holding Kansai Electric Power or generate 4.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Resource America  vs.  Kansai Electric Power

 Performance 
       Timeline  
Resource America 

Risk-Adjusted Performance

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Over the last 90 days Resource America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Resource America is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.
Kansai Electric Power 

Risk-Adjusted Performance

3 of 100

 
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High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Kansai Electric Power are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Kansai Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Resource America and Kansai Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Resource America and Kansai Electric

The main advantage of trading using opposite Resource America and Kansai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource America position performs unexpectedly, Kansai Electric 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 Kansai Electric will offset losses from the drop in Kansai Electric's long position.
The idea behind Resource America and Kansai Electric Power 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 CEOs Directory module to screen CEOs from public companies around the world.

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