Correlation Between Kee Tai and Hung Ching

Can any of the company-specific risk be diversified away by investing in both Kee Tai and Hung Ching 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 Hung Ching 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 Hung Ching Development, you can compare the effects of market volatilities on Kee Tai and Hung Ching 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 Hung Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Hung Ching.

Diversification Opportunities for Kee Tai and Hung Ching

-0.41

Correlation Coefficient

Kee Tai  Hung Ching

Very good diversification

The 3 months correlation between Kee and Hung is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Hung Ching Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Ching Development 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 Hung Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Ching Development has no effect on the direction of Kee Tai i.e., Kee Tai and Hung Ching go up and down completely randomly.

Pair Corralation between Kee Tai and Hung Ching

Assuming the 90 days trading horizon Kee Tai Properties is expected to under-perform the Hung Ching. But the stock apears to be less risky and, when comparing its historical volatility, Kee Tai Properties is 1.56 times less risky than Hung Ching. The stock trades about -0.33 of its potential returns per unit of risk. The Hung Ching Development is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,910  in Hung Ching Development on October 10, 2024 and sell it today you would lose (70.00) from holding Hung Ching Development or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kee Tai Properties  vs.  Hung Ching Development

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.

Hung Ching Development

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hung Ching Development are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hung Ching showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kee Tai and Hung Ching

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

The idea behind Kee Tai Properties and Hung Ching Development 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.