Correlation Between Keisei Electric and CSX

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

By analyzing existing cross correlation between Keisei Electric Railway and CSX Corporation, you can compare the effects of market volatilities on Keisei Electric and CSX 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 Keisei Electric with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keisei Electric and CSX.

Diversification Opportunities for Keisei Electric and CSX

0.43

Correlation Coefficient

Keisei Electric  CSX

Very weak diversification

The 3 months correlation between Keisei and CSX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Keisei Electric Railway and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Keisei Electric 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 Keisei Electric Railway are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Keisei Electric i.e., Keisei Electric and CSX go up and down completely randomly.

Pair Corralation between Keisei Electric and CSX

Assuming the 90 days horizon Keisei Electric is expected to generate 7.92 times less return on investment than CSX. In addition to that, Keisei Electric is 1.43 times more volatile than CSX Corporation. It trades about 0.0 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.02 per unit of volatility. If you would invest  3,077  in CSX Corporation on October 1, 2024 and sell it today you would earn a total of  43.00  from holding CSX Corporation or generate 1.4% return on investment over 90 days.

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

Keisei Electric Railway  vs.  CSX Corp.

Keisei Electric Railway

Risk-Adjusted Performance

0 of 100

Very Weak

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

CSX Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Keisei Electric and CSX

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

The idea behind Keisei Electric Railway and CSX Corporation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..