Correlation Between Keppel and Ayala Corp
Can any of the company-specific risk be diversified away by investing in both Keppel and Ayala Corp 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 and Ayala Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keppel Limited and Ayala Corp ADR, you can compare the effects of market volatilities on Keppel and Ayala Corp 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 with a short position of Ayala Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keppel and Ayala Corp.
Diversification Opportunities for Keppel and Ayala Corp
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Keppel and Ayala is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Ayala Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Corp ADR and Keppel 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 Limited are associated (or correlated) with Ayala Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Corp ADR has no effect on the direction of Keppel i.e., Keppel and Ayala Corp go up and down completely randomly.
Pair Corralation between Keppel and Ayala Corp
Assuming the 90 days horizon Keppel Limited is expected to generate 1.09 times more return on investment than Ayala Corp. However, Keppel is 1.09 times more volatile than Ayala Corp ADR. It trades about 0.04 of its potential returns per unit of risk. Ayala Corp ADR is currently generating about 0.02 per unit of risk. If you would invest 650.00 in Keppel Limited on September 19, 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 Against |
| Strength | Insignificant |
| Accuracy | 67.08% |
| Values | Daily Returns |
Keppel Limited vs. Ayala Corp ADR
Performance |
| Timeline |
| Keppel Limited |
| Ayala Corp ADR |
Keppel and Ayala Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keppel and Ayala Corp
The main advantage of trading using opposite Keppel and Ayala Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keppel position performs unexpectedly, Ayala Corp 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 Ayala Corp will offset losses from the drop in Ayala Corp's long position.| Keppel vs. Arca Continental SAB | Keppel vs. Becle SA de | Keppel vs. Aquagold International | Keppel vs. Morningstar Unconstrained Allocation |
| Ayala Corp vs. Arca Continental SAB | Ayala Corp vs. Becle SA de | Ayala Corp vs. Aquagold International | Ayala Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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