Correlation Between Kee Tai and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Kee Tai and Hung Sheng 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 Hung Sheng 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 Hung Sheng Construction, you can compare the effects of market volatilities on Kee Tai and Hung Sheng 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 Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Hung Sheng.
Diversification Opportunities for Kee Tai and Hung Sheng
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kee and Hung is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction 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 Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Kee Tai i.e., Kee Tai and Hung Sheng go up and down completely randomly.
Pair Corralation between Kee Tai and Hung Sheng
Assuming the 90 days trading horizon Kee Tai Properties is expected to under-perform the Hung Sheng. But the stock apears to be less risky and, when comparing its historical volatility, Kee Tai Properties is 1.23 times less risky than Hung Sheng. The stock trades about -0.1 of its potential returns per unit of risk. The Hung Sheng Construction is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,570 in Hung Sheng Construction on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Hung Sheng Construction or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kee Tai Properties vs. Hung Sheng Construction
Performance |
| Timeline |
| Kee Tai Properties |
| Hung Sheng Construction |
Kee Tai and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kee Tai and Hung Sheng
The main advantage of trading using opposite Kee Tai and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kee Tai position performs unexpectedly, Hung Sheng 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 Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Kee Tai vs. Tainan Spinning Co | Kee Tai vs. Carnival Industrial Corp | Kee Tai vs. Symtek Automation Asia | Kee Tai vs. CTCI Corp |
| Hung Sheng vs. Tainan Spinning Co | Hung Sheng vs. Carnival Industrial Corp | Hung Sheng vs. Symtek Automation Asia | Hung Sheng vs. CTCI Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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