Correlation Between Kee Tai and Highwealth Construction

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

Diversification Opportunities for Kee Tai and Highwealth Construction

0.02

Correlation Coefficient

Kee Tai  Highwealth Construction

Significant diversification

The 3 months correlation between Kee and Highwealth is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Highwealth Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwealth Construction 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 Highwealth Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwealth Construction has no effect on the direction of Kee Tai i.e., Kee Tai and Highwealth Construction go up and down completely randomly.

Pair Corralation between Kee Tai and Highwealth Construction

Assuming the 90 days trading horizon Kee Tai Properties is expected to generate 1.14 times more return on investment than Highwealth Construction. However, Kee Tai is 1.14 times more volatile than Highwealth Construction Corp. It trades about 0.02 of its potential returns per unit of risk. Highwealth Construction Corp is currently generating about 0.02 per unit of risk. If you would invest  1,270  in Kee Tai Properties on October 11, 2024 and sell it today you would earn a total of  170.00  from holding Kee Tai Properties or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kee Tai Properties  vs.  Highwealth 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.

Highwealth Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highwealth Construction Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Highwealth Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kee Tai and Highwealth Construction

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

The idea behind Kee Tai Properties and Highwealth 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.