Correlation Between KCE Electronics and CSL

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

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

Diversification Opportunities for KCE Electronics and CSL

-0.12

Correlation Coefficient

KCE Electronics  CSL

Good diversification

The 3 months correlation between KCE and CSL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding KCE Electronics Public and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and KCE Electronics 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 Electronics Public are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of KCE Electronics i.e., KCE Electronics and CSL go up and down completely randomly.

Pair Corralation between KCE Electronics and CSL

Assuming the 90 days trading horizon KCE Electronics Public is expected to generate 1.3 times more return on investment than CSL. However, KCE Electronics is 1.3 times more volatile than CSL Limited. It trades about 0.26 of its potential returns per unit of risk. CSL Limited is currently generating about -0.02 per unit of risk. If you would invest  42.00  in KCE Electronics Public on April 15, 2025 and sell it today you would earn a total of  14.00  from holding KCE Electronics Public or generate 33.33% return on investment over 90 days.

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

KCE Electronics Public  vs.  CSL Limited

KCE Electronics Public

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KCE Electronics Public are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, KCE Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

CSL Limited

Risk-Adjusted Performance

Weak

Over the last 90 days CSL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CSL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KCE Electronics and CSL

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

The idea behind KCE Electronics Public and CSL Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.