Correlation Between EnTie Commercial and Kee Tai
Can any of the company-specific risk be diversified away by investing in both EnTie Commercial and Kee Tai 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 EnTie Commercial and Kee Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnTie Commercial Bank and Kee Tai Properties, you can compare the effects of market volatilities on EnTie Commercial and Kee Tai 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 EnTie Commercial with a short position of Kee Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Kee Tai.
Diversification Opportunities for EnTie Commercial and Kee Tai
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EnTie and Kee is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Kee Tai Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kee Tai Properties and EnTie Commercial 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 EnTie Commercial Bank are associated (or correlated) with Kee Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kee Tai Properties has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Kee Tai go up and down completely randomly.
Pair Corralation between EnTie Commercial and Kee Tai
Assuming the 90 days trading horizon EnTie Commercial Bank is expected to generate 0.66 times more return on investment than Kee Tai. However, EnTie Commercial Bank is 1.51 times less risky than Kee Tai. It trades about -0.03 of its potential returns per unit of risk. Kee Tai Properties is currently generating about -0.07 per unit of risk. If you would invest 1,475 in EnTie Commercial Bank on September 23, 2024 and sell it today you would lose (105.00) from holding EnTie Commercial Bank or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnTie Commercial Bank vs. Kee Tai Properties
Performance |
| Timeline |
| EnTie Commercial Bank |
| Kee Tai Properties |
EnTie Commercial and Kee Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnTie Commercial and Kee Tai
The main advantage of trading using opposite EnTie Commercial and Kee Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnTie Commercial position performs unexpectedly, Kee Tai 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 Kee Tai will offset losses from the drop in Kee Tai's long position.| EnTie Commercial vs. Taiwan Semiconductor Manufacturing | EnTie Commercial vs. Hon Hai Precision | EnTie Commercial vs. MediaTek | EnTie Commercial vs. Chunghwa Telecom Co |
| Kee Tai vs. Hung Sheng Construction | Kee Tai vs. Chainqui Construction Development | Kee Tai vs. BES Engineering Co | Kee Tai vs. Long Bon International |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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