Correlation Between KEPPEL CORP and Major Drilling
Can any of the company-specific risk be diversified away by investing in both KEPPEL CORP and Major Drilling 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 KEPPEL CORP and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEPPEL P and Major Drilling Group, you can compare the effects of market volatilities on KEPPEL CORP and Major Drilling 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 KEPPEL CORP with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPPEL CORP and Major Drilling.
Diversification Opportunities for KEPPEL CORP and Major Drilling
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between KEPPEL and Major is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KEPPEL P and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and KEPPEL CORP 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 KEPPEL P are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of KEPPEL CORP i.e., KEPPEL CORP and Major Drilling go up and down completely randomly.
Pair Corralation between KEPPEL CORP and Major Drilling
Assuming the 90 days trading horizon KEPPEL P is expected to generate 0.57 times more return on investment than Major Drilling. However, KEPPEL P is 1.74 times less risky than Major Drilling. It trades about 0.08 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 293.00 in KEPPEL P on September 3, 2024 and sell it today you would earn a total of 178.00 from holding KEPPEL P or generate 60.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPPEL P vs. Major Drilling Group
Performance |
| Timeline |
| KEPPEL CORP |
| Major Drilling Group |
KEPPEL CORP and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPPEL CORP and Major Drilling
The main advantage of trading using opposite KEPPEL CORP and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPPEL CORP position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| KEPPEL CORP vs. Major Drilling Group | KEPPEL CORP vs. BORR DRILLING NEW | KEPPEL CORP vs. SPORTING | KEPPEL CORP vs. DICKS Sporting Goods |
| Major Drilling vs. Commercial Vehicle Group | Major Drilling vs. Citic Telecom International | Major Drilling vs. Hemisphere Energy Corp | Major Drilling vs. Spirent Communications plc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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