Correlation Between Keppel and CK Hutchison
Can any of the company-specific risk be diversified away by investing in both Keppel and CK Hutchison 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 CK Hutchison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keppel Limited and CK Hutchison Holdings, you can compare the effects of market volatilities on Keppel and CK Hutchison 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 CK Hutchison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keppel and CK Hutchison.
Diversification Opportunities for Keppel and CK Hutchison
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Keppel and CKHUY is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings 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 CK Hutchison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Hutchison Holdings has no effect on the direction of Keppel i.e., Keppel and CK Hutchison go up and down completely randomly.
Pair Corralation between Keppel and CK Hutchison
Assuming the 90 days horizon Keppel Limited is expected to generate 3.47 times more return on investment than CK Hutchison. However, Keppel is 3.47 times more volatile than CK Hutchison Holdings. It trades about 0.04 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.01 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 Together |
| Strength | Significant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Keppel Limited vs. CK Hutchison Holdings
Performance |
| Timeline |
| Keppel Limited |
| CK Hutchison Holdings |
Keppel and CK Hutchison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keppel and CK Hutchison
The main advantage of trading using opposite Keppel and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keppel position performs unexpectedly, CK Hutchison 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 CK Hutchison will offset losses from the drop in CK Hutchison's long position.| Keppel vs. Arca Continental SAB | Keppel vs. Becle SA de | Keppel vs. Aquagold International | Keppel vs. Morningstar Unconstrained Allocation |
| CK Hutchison vs. HUMANA INC | CK Hutchison vs. Barloworld Ltd ADR | CK Hutchison vs. Morningstar Unconstrained Allocation | CK Hutchison vs. Thrivent High Yield |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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