Correlation Between Arca Continental and Keppel
Can any of the company-specific risk be diversified away by investing in both Arca Continental and Keppel 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 Arca Continental and Keppel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arca Continental SAB and Keppel Limited, you can compare the effects of market volatilities on Arca Continental and Keppel 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 Arca Continental with a short position of Keppel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arca Continental and Keppel.
Diversification Opportunities for Arca Continental and Keppel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arca and Keppel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arca Continental SAB and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited and Arca Continental 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 Arca Continental SAB are associated (or correlated) with Keppel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keppel Limited has no effect on the direction of Arca Continental i.e., Arca Continental and Keppel go up and down completely randomly.
Pair Corralation between Arca Continental and Keppel
Assuming the 90 days horizon Arca Continental SAB is expected to under-perform the Keppel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arca Continental SAB is 1.43 times less risky than Keppel. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Keppel Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 965.00 in Keppel Limited on September 20, 2024 and sell it today you would earn a total of 51.00 from holding Keppel Limited or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arca Continental SAB vs. Keppel Limited
Performance |
| Timeline |
| Arca Continental SAB |
| Keppel Limited |
Arca Continental and Keppel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arca Continental and Keppel
The main advantage of trading using opposite Arca Continental and Keppel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arca Continental position performs unexpectedly, Keppel 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 Keppel will offset losses from the drop in Keppel's long position.| Arca Continental vs. The Coca Cola | Arca Continental vs. Monster Beverage Corp | Arca Continental vs. Celsius Holdings | Arca Continental vs. Coca Cola Consolidated |
| Keppel vs. Arca Continental SAB | Keppel vs. Becle SA de | Keppel vs. Aquagold International | Keppel vs. Morningstar Unconstrained Allocation |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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