Correlation Between Halma Plc and Keppel
Can any of the company-specific risk be diversified away by investing in both Halma Plc 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 Halma Plc and Keppel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and Keppel Limited, you can compare the effects of market volatilities on Halma Plc 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 Halma Plc with a short position of Keppel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Keppel.
Diversification Opportunities for Halma Plc and Keppel
Very weak diversification
The 3 months correlation between Halma and Keppel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited and Halma Plc 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 Halma plc 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 Halma Plc i.e., Halma Plc and Keppel go up and down completely randomly.
Pair Corralation between Halma Plc and Keppel
Assuming the 90 days horizon Halma Plc is expected to generate 1.61 times less return on investment than Keppel. But when comparing it to its historical volatility, Halma plc is 1.93 times less risky than Keppel. It trades about 0.05 of its potential returns per unit of risk. Keppel Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Keppel Limited on September 20, 2024 and sell it today you would earn a total of 366.00 from holding Keppel Limited or generate 56.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Halma plc vs. Keppel Limited
Performance |
| Timeline |
| Halma plc |
| Keppel Limited |
Halma Plc and Keppel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and Keppel
The main advantage of trading using opposite Halma Plc and Keppel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc 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.| Halma Plc vs. Arca Continental SAB | Halma Plc vs. Becle SA de | Halma Plc vs. Aquagold International | Halma Plc vs. Morningstar Unconstrained Allocation |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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