Correlation Between EnTie Commercial and Kee Tai

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

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

Diversification Opportunities for EnTie Commercial and Kee Tai

0.25

Correlation Coefficient

EnTie Commercial  Kee Tai

Modest diversification

The 3 months correlation between EnTie and Kee is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Kee Tai Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kee Tai Properties and EnTie Commercial 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 EnTie Commercial Bank are associated (or correlated) with Kee Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kee Tai Properties has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Kee Tai go up and down completely randomly.

Pair Corralation between EnTie Commercial and Kee Tai

Assuming the 90 days trading horizon EnTie Commercial Bank is expected to under-perform the Kee Tai. But the stock apears to be less risky and, when comparing its historical volatility, EnTie Commercial Bank is 1.99 times less risky than Kee Tai. The stock trades about 0.0 of its potential returns per unit of risk. The Kee Tai Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Kee Tai Properties on September 17, 2024 and sell it today you would earn a total of  190.00  from holding Kee Tai Properties or generate 14.29% return on investment over 90 days.

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

EnTie Commercial Bank  vs.  Kee Tai Properties

EnTie Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with EnTie Commercial and Kee Tai

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

The idea behind EnTie Commercial Bank and Kee Tai Properties 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.