Correlation Between Power Line and KGI Securities

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

By analyzing existing cross correlation between Power Line Engineering and KGI Securities Public, you can compare the effects of market volatilities on Power Line and KGI Securities 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 Power Line with a short position of KGI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Line and KGI Securities.

Diversification Opportunities for Power Line and KGI Securities

0.13

Correlation Coefficient

Power Line  KGI Securities

Average diversification

The 3 months correlation between Power and KGI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Power Line Engineering and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities Public and Power Line 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 Power Line Engineering are associated (or correlated) with KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of Power Line i.e., Power Line and KGI Securities go up and down completely randomly.

Pair Corralation between Power Line and KGI Securities

Assuming the 90 days trading horizon Power Line Engineering is expected to generate 3.71 times more return on investment than KGI Securities. However, Power Line is 3.71 times more volatile than KGI Securities Public. It trades about 0.13 of its potential returns per unit of risk. KGI Securities Public is currently generating about 0.01 per unit of risk. If you would invest  21.00  in Power Line Engineering on April 22, 2025 and sell it today you would earn a total of  7.00  from holding Power Line Engineering or generate 33.33% return on investment over 90 days.

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

Power Line Engineering  vs.  KGI Securities Public

Power Line Engineering

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Power Line Engineering are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Power Line disclosed solid returns over the last few months and may actually be approaching a breakup point.

KGI Securities Public

Risk-Adjusted Performance

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 quite persistent forward indicators, KGI Securities is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Power Line and KGI Securities

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

The idea behind Power Line Engineering and KGI Securities 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 CEOs Directory module to screen CEOs from public companies around the world.