Correlation Between Kee Tai and Fortune Electric
Can any of the company-specific risk be diversified away by investing in both Kee Tai and Fortune 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 Kee Tai and Fortune Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kee Tai Properties and Fortune Electric Co, you can compare the effects of market volatilities on Kee Tai and Fortune 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 Kee Tai with a short position of Fortune Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Fortune Electric.
Diversification Opportunities for Kee Tai and Fortune Electric
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kee and Fortune is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Fortune Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Electric and Kee Tai 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 Kee Tai Properties are associated (or correlated) with Fortune Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Electric has no effect on the direction of Kee Tai i.e., Kee Tai and Fortune Electric go up and down completely randomly.
Pair Corralation between Kee Tai and Fortune Electric
Assuming the 90 days trading horizon Kee Tai Properties is expected to under-perform the Fortune Electric. But the stock apears to be less risky and, when comparing its historical volatility, Kee Tai Properties is 2.84 times less risky than Fortune Electric. The stock trades about -0.05 of its potential returns per unit of risk. The Fortune Electric Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 55,900 in Fortune Electric Co on September 2, 2024 and sell it today you would lose (900.00) from holding Fortune Electric Co or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kee Tai Properties vs. Fortune Electric Co
Performance |
| Timeline |
| Kee Tai Properties |
| Fortune Electric |
Kee Tai and Fortune Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kee Tai and Fortune Electric
The main advantage of trading using opposite Kee Tai and Fortune Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kee Tai position performs unexpectedly, Fortune 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 Fortune Electric will offset losses from the drop in Fortune Electric's long position.| Kee Tai vs. Ruentex Development Co | Kee Tai vs. CTCI Corp | Kee Tai vs. Information Technology Total | Kee Tai vs. Ennoconn Corp |
| Fortune Electric vs. BES Engineering Co | Fortune Electric vs. Continental Holdings Corp | Fortune Electric vs. Kee Tai Properties | Fortune Electric vs. Hung Sheng Construction |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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