Correlation Between Shanghai Industrial and KeppelLimited
Can any of the company-specific risk be diversified away by investing in both Shanghai Industrial and KeppelLimited 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 Shanghai Industrial and KeppelLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Industrial Holdings and Keppel Limited, you can compare the effects of market volatilities on Shanghai Industrial and KeppelLimited 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 Shanghai Industrial with a short position of KeppelLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Industrial and KeppelLimited.
Diversification Opportunities for Shanghai Industrial and KeppelLimited
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shanghai and KeppelLimited is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Industrial Holdings and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited and Shanghai Industrial 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 Shanghai Industrial Holdings are associated (or correlated) with KeppelLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keppel Limited has no effect on the direction of Shanghai Industrial i.e., Shanghai Industrial and KeppelLimited go up and down completely randomly.
Pair Corralation between Shanghai Industrial and KeppelLimited
Assuming the 90 days horizon Shanghai Industrial Holdings is expected to under-perform the KeppelLimited. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shanghai Industrial Holdings is 1.29 times less risky than KeppelLimited. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Keppel Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
Shanghai Industrial Holdings vs. Keppel Limited
Performance |
| Timeline |
| Shanghai Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Keppel Limited |
Shanghai Industrial and KeppelLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Industrial and KeppelLimited
The main advantage of trading using opposite Shanghai Industrial and KeppelLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Industrial position performs unexpectedly, KeppelLimited 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 KeppelLimited will offset losses from the drop in KeppelLimited's long position.| Shanghai Industrial vs. Teijin | Shanghai Industrial vs. Ayala Corp ADR | Shanghai Industrial vs. CK Hutchison Holdings | Shanghai Industrial vs. 1847 Holdings LLC |
| KeppelLimited vs. Singapore Telecommunications PK | KeppelLimited vs. United Overseas Bank | KeppelLimited vs. DBS Group Holdings | KeppelLimited vs. Power Assets Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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