Correlation Between Power Assets and KeppelLimited
Can any of the company-specific risk be diversified away by investing in both Power Assets and KeppelLimited 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 Power Assets and KeppelLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Assets Holdings and Keppel Limited, you can compare the effects of market volatilities on Power Assets and KeppelLimited 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 Power Assets with a short position of KeppelLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Assets and KeppelLimited.
Diversification Opportunities for Power Assets and KeppelLimited
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and KeppelLimited is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Power Assets Holdings and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited and Power Assets 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 Power Assets Holdings are associated (or correlated) with KeppelLimited. 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 Power Assets i.e., Power Assets and KeppelLimited go up and down completely randomly.
Pair Corralation between Power Assets and KeppelLimited
Assuming the 90 days horizon Power Assets Holdings is expected to generate 0.74 times more return on investment than KeppelLimited. However, Power Assets Holdings is 1.36 times less risky than KeppelLimited. It trades about 0.04 of its potential returns per unit of risk. Keppel Limited is currently generating about 0.01 per unit of risk. If you would invest 567.00 in Power Assets Holdings on December 3, 2024 and sell it today you would earn a total of 103.00 from holding Power Assets Holdings or generate 18.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.02% |
| Values | Daily Returns |
Power Assets Holdings vs. Keppel Limited
Performance |
| Timeline |
| Power Assets Holdings |
| Keppel Limited |
Power Assets and KeppelLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Assets and KeppelLimited
The main advantage of trading using opposite Power Assets and KeppelLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Assets position performs unexpectedly, KeppelLimited 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 KeppelLimited will offset losses from the drop in KeppelLimited's long position.| Power Assets vs. TransAlta Corp | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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