Correlation Between Keck Seng and Minetech Resources
Can any of the company-specific risk be diversified away by investing in both Keck Seng and Minetech Resources 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 Keck Seng and Minetech Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keck Seng Malaysia and Minetech Resources Bhd, you can compare the effects of market volatilities on Keck Seng and Minetech Resources 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 Keck Seng with a short position of Minetech Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Minetech Resources.
Diversification Opportunities for Keck Seng and Minetech Resources
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Keck and Minetech is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Malaysia and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources Bhd and Keck Seng 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 Keck Seng Malaysia are associated (or correlated) with Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Keck Seng i.e., Keck Seng and Minetech Resources go up and down completely randomly.
Pair Corralation between Keck Seng and Minetech Resources
Assuming the 90 days trading horizon Keck Seng is expected to generate 5.25 times less return on investment than Minetech Resources. But when comparing it to its historical volatility, Keck Seng Malaysia is 5.3 times less risky than Minetech Resources. It trades about 0.09 of its potential returns per unit of risk. Minetech Resources Bhd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4.50 in Minetech Resources Bhd on September 4, 2024 and sell it today you would earn a total of 9.50 from holding Minetech Resources Bhd or generate 211.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.65% |
| Values | Daily Returns |
Keck Seng Malaysia vs. Minetech Resources Bhd
Performance |
| Timeline |
| Keck Seng Malaysia |
| Minetech Resources Bhd |
Keck Seng and Minetech Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keck Seng and Minetech Resources
The main advantage of trading using opposite Keck Seng and Minetech Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng position performs unexpectedly, Minetech Resources 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 Minetech Resources will offset losses from the drop in Minetech Resources' long position.| Keck Seng vs. Uchi Technologies Bhd | Keck Seng vs. Press Metal Bhd | Keck Seng vs. Alliance Financial Group | Keck Seng vs. Choo Bee Metal |
| Minetech Resources vs. Swift Haulage Bhd | Minetech Resources vs. Insas Bhd | Minetech Resources vs. Bina Darulaman Bhd | Minetech Resources vs. Sunzen Biotech Bhd |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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