Correlation Between Kee Tai and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Kee Tai and Wan Hai 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 Wan Hai 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 Wan Hai Lines, you can compare the effects of market volatilities on Kee Tai and Wan Hai 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 Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Wan Hai.
Diversification Opportunities for Kee Tai and Wan Hai
Very good diversification
The 3 months correlation between Kee and Wan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines 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 Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Kee Tai i.e., Kee Tai and Wan Hai go up and down completely randomly.
Pair Corralation between Kee Tai and Wan Hai
Assuming the 90 days trading horizon Kee Tai Properties is expected to under-perform the Wan Hai. But the stock apears to be less risky and, when comparing its historical volatility, Kee Tai Properties is 2.45 times less risky than Wan Hai. The stock trades about -0.02 of its potential returns per unit of risk. The Wan Hai Lines is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,860 in Wan Hai Lines on August 27, 2024 and sell it today you would earn a total of 500.00 from holding Wan Hai Lines or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kee Tai Properties vs. Wan Hai Lines
Performance |
| Timeline |
| Kee Tai Properties |
| Wan Hai Lines |
Kee Tai and Wan Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kee Tai and Wan Hai
The main advantage of trading using opposite Kee Tai and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kee Tai position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.| Kee Tai vs. Hung Sheng Construction | Kee Tai vs. Chainqui Construction Development | Kee Tai vs. BES Engineering Co | Kee Tai vs. Long Bon International |
| Wan Hai vs. Sunny Friend Environmental | Wan Hai vs. TTET Union Corp | Wan Hai vs. ECOVE Environment Corp | Wan Hai vs. Yulon Finance 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 Stocks Directory module to find actively traded stocks across global markets.
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