Correlation Between Chien Kuo and Kee Tai
Can any of the company-specific risk be diversified away by investing in both Chien Kuo 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 Chien Kuo and Kee Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chien Kuo Construction and Kee Tai Properties, you can compare the effects of market volatilities on Chien Kuo 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 Chien Kuo with a short position of Kee Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Kee Tai.
Diversification Opportunities for Chien Kuo and Kee Tai
Good diversification
The 3 months correlation between Chien and Kee is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction 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 Chien Kuo 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 Chien Kuo Construction 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 Chien Kuo i.e., Chien Kuo and Kee Tai go up and down completely randomly.
Pair Corralation between Chien Kuo and Kee Tai
Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 1.05 times more return on investment than Kee Tai. However, Chien Kuo is 1.05 times more volatile than Kee Tai Properties. It trades about 0.33 of its potential returns per unit of risk. Kee Tai Properties is currently generating about -0.21 per unit of risk. If you would invest 2,570 in Chien Kuo Construction on November 5, 2024 and sell it today you would earn a total of 205.00 from holding Chien Kuo Construction or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chien Kuo Construction vs. Kee Tai Properties
Performance |
| Timeline |
| Chien Kuo Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Kee Tai Properties |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chien Kuo and Kee Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chien Kuo and Kee Tai
The main advantage of trading using opposite Chien Kuo and Kee Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo 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.The idea behind Chien Kuo Construction and Kee Tai Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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