Correlation Between Keck Seng and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Keck Seng and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on Keck Seng and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Yokohama Rubber.
Diversification Opportunities for Keck Seng and Yokohama Rubber
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Keck and Yokohama is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Keck Seng i.e., Keck Seng and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Keck Seng and Yokohama Rubber
Assuming the 90 days horizon Keck Seng Investments is expected to generate 3.73 times more return on investment than Yokohama Rubber. However, Keck Seng is 3.73 times more volatile than The Yokohama Rubber. It trades about 0.09 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.17 per unit of risk. If you would invest 23.00 in Keck Seng Investments on October 30, 2024 and sell it today you would earn a total of 3.00 from holding Keck Seng Investments or generate 13.04% 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. The Yokohama Rubber
Performance |
| Timeline |
| Keck Seng Investments |
| Yokohama Rubber |
Keck Seng and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keck Seng and Yokohama Rubber
The main advantage of trading using opposite Keck Seng and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Keck Seng vs. DETALION GAMES SA | Keck Seng vs. TEN SQUARE GAMES | Keck Seng vs. Media and Games | Keck Seng vs. American Public Education |
| Yokohama Rubber vs. Telecom Argentina SA | Yokohama Rubber vs. ULTRA CLEAN HLDGS | Yokohama Rubber vs. GMO Internet | Yokohama Rubber vs. Singapore Telecommunications Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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