Correlation Between Keppel and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Keppel and Halma Plc 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 Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keppel Limited and Halma plc, you can compare the effects of market volatilities on Keppel and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keppel and Halma Plc.
Diversification Opportunities for Keppel and Halma Plc
Very weak diversification
The 3 months correlation between Keppel and Halma is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Keppel i.e., Keppel and Halma Plc go up and down completely randomly.
Pair Corralation between Keppel and Halma Plc
Assuming the 90 days horizon Keppel is expected to generate 5.33 times less return on investment than Halma Plc. In addition to that, Keppel is 1.2 times more volatile than Halma plc. It trades about 0.04 of its total potential returns per unit of risk. Halma plc is currently generating about 0.25 per unit of volatility. If you would invest 3,152 in Halma plc on September 20, 2024 and sell it today you would earn a total of 448.00 from holding Halma plc or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Keppel Limited vs. Halma plc
Performance |
| Timeline |
| Keppel Limited |
| Halma plc |
Keppel and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keppel and Halma Plc
The main advantage of trading using opposite Keppel and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keppel position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| Keppel vs. Arca Continental SAB | Keppel vs. Becle SA de | Keppel vs. Aquagold International | Keppel vs. Morningstar Unconstrained Allocation |
| Halma Plc vs. Arca Continental SAB | Halma Plc vs. Becle SA de | Halma Plc vs. Aquagold International | Halma Plc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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