Correlation Between KeppelLimited and Shanghai Industrial
Can any of the company-specific risk be diversified away by investing in both KeppelLimited and Shanghai Industrial 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 KeppelLimited and Shanghai Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keppel Limited and Shanghai Industrial Holdings, you can compare the effects of market volatilities on KeppelLimited and Shanghai Industrial 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 KeppelLimited with a short position of Shanghai Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeppelLimited and Shanghai Industrial.
Diversification Opportunities for KeppelLimited and Shanghai Industrial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KeppelLimited and Shanghai is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Shanghai Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Industrial and KeppelLimited 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 Shanghai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Industrial has no effect on the direction of KeppelLimited i.e., KeppelLimited and Shanghai Industrial go up and down completely randomly.
Pair Corralation between KeppelLimited and Shanghai Industrial
Assuming the 90 days horizon Keppel Limited is expected to generate 1.29 times more return on investment than Shanghai Industrial. However, KeppelLimited is 1.29 times more volatile than Shanghai Industrial Holdings. It trades about 0.04 of its potential returns per unit of risk. Shanghai Industrial Holdings is currently generating about 0.0 per unit of risk. If you would invest 635.00 in Keppel Limited on November 7, 2024 and sell it today you would earn a total of 338.00 from holding Keppel Limited or generate 53.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 41.27% |
| Values | Daily Returns |
Keppel Limited vs. Shanghai Industrial Holdings
Performance |
| Timeline |
| Keppel Limited |
| Shanghai Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KeppelLimited and Shanghai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeppelLimited and Shanghai Industrial
The main advantage of trading using opposite KeppelLimited and Shanghai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeppelLimited position performs unexpectedly, Shanghai Industrial 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 Shanghai Industrial will offset losses from the drop in Shanghai Industrial's long position.| KeppelLimited vs. Singapore Telecommunications PK | KeppelLimited vs. United Overseas Bank | KeppelLimited vs. DBS Group Holdings | KeppelLimited vs. Power Assets Holdings |
| Shanghai Industrial vs. Teijin | Shanghai Industrial vs. Ayala Corp ADR | Shanghai Industrial vs. CK Hutchison Holdings | Shanghai Industrial vs. 1847 Holdings LLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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