Correlation Between MFC Industrial and KCE Electronics

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

By analyzing existing cross correlation between MFC Industrial Investment and KCE Electronics Public, you can compare the effects of market volatilities on MFC Industrial and KCE Electronics 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 MFC Industrial with a short position of KCE Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and KCE Electronics.

Diversification Opportunities for MFC Industrial and KCE Electronics

-0.46

Correlation Coefficient

MFC Industrial  KCE Electronics

Very good diversification

The 3 months correlation between MFC and KCE is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and KCE Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCE Electronics Public and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with KCE Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCE Electronics Public has no effect on the direction of MFC Industrial i.e., MFC Industrial and KCE Electronics go up and down completely randomly.

Pair Corralation between MFC Industrial and KCE Electronics

Assuming the 90 days trading horizon MFC Industrial Investment is expected to under-perform the KCE Electronics. But the stock apears to be less risky and, when comparing its historical volatility, MFC Industrial Investment is 3.74 times less risky than KCE Electronics. The stock trades about -0.07 of its potential returns per unit of risk. The KCE Electronics Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,700  in KCE Electronics Public on April 24, 2025 and sell it today you would earn a total of  390.00  from holding KCE Electronics Public or generate 22.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MFC Industrial Investment  vs.  KCE Electronics Public

MFC Industrial Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFC Industrial Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MFC Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

KCE Electronics Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KCE Electronics Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, KCE Electronics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFC Industrial and KCE Electronics

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

The idea behind MFC Industrial Investment and KCE Electronics Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.