Correlation Between Kee Tai and Kindom Construction

Can any of the company-specific risk be diversified away by investing in both Kee Tai and Kindom Construction 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 Kee Tai and Kindom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kee Tai Properties and Kindom Construction Corp, you can compare the effects of market volatilities on Kee Tai and Kindom Construction 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 Kee Tai with a short position of Kindom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Kindom Construction.

Diversification Opportunities for Kee Tai and Kindom Construction

0.0

Correlation Coefficient

Kee Tai  Kindom Construction

Pay attention - limited upside

The 3 months correlation between Kee and Kindom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Kindom Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kindom Construction Corp and Kee Tai 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 Kee Tai Properties are associated (or correlated) with Kindom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kindom Construction Corp has no effect on the direction of Kee Tai i.e., Kee Tai and Kindom Construction go up and down completely randomly.

Pair Corralation between Kee Tai and Kindom Construction

Assuming the 90 days trading horizon Kee Tai is expected to generate 3.18 times less return on investment than Kindom Construction. But when comparing it to its historical volatility, Kee Tai Properties is 1.01 times less risky than Kindom Construction. It trades about 0.02 of its potential returns per unit of risk. Kindom Construction Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,721  in Kindom Construction Corp on October 11, 2024 and sell it today you would earn a total of  2,339  from holding Kindom Construction Corp or generate 85.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Kee Tai Properties  vs.  Kindom Construction Corp

Kee Tai Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kee Tai Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kindom Construction Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kindom Construction Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kindom Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kee Tai and Kindom Construction

The main advantage of trading using opposite Kee Tai and Kindom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kee Tai position performs unexpectedly, Kindom Construction 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 Kindom Construction will offset losses from the drop in Kindom Construction's long position.

The idea behind Kee Tai Properties and Kindom Construction Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.