Correlation Between Keck Seng and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Keck Seng and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keck Seng Investments and Rheinmetall AG, you can compare the effects of market volatilities on Keck Seng and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Rheinmetall.
Diversification Opportunities for Keck Seng and Rheinmetall
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Keck and Rheinmetall is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Investments are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Keck Seng i.e., Keck Seng and Rheinmetall go up and down completely randomly.
Pair Corralation between Keck Seng and Rheinmetall
Assuming the 90 days horizon Keck Seng is expected to generate 2.86 times less return on investment than Rheinmetall. In addition to that, Keck Seng is 2.3 times more volatile than Rheinmetall AG. It trades about 0.05 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.35 per unit of volatility. If you would invest 53,300 in Rheinmetall AG on November 7, 2024 and sell it today you would earn a total of 22,740 from holding Rheinmetall AG or generate 42.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keck Seng Investments vs. Rheinmetall AG
Performance |
| Timeline |
| Keck Seng Investments |
| Rheinmetall AG |
Keck Seng and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keck Seng and Rheinmetall
The main advantage of trading using opposite Keck Seng and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Keck Seng vs. FIREWEED METALS P | Keck Seng vs. MCEWEN MINING INC | Keck Seng vs. Cleanaway Waste Management | Keck Seng vs. ADRIATIC METALS LS 013355 |
| Rheinmetall vs. Verizon Communications | Rheinmetall vs. TELECOM ITALIA | Rheinmetall vs. AEGEAN AIRLINES | Rheinmetall vs. Southwest Airlines Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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