Correlation Between Keck Seng and Kuala Lumpur

Can any of the company-specific risk be diversified away by investing in both Keck Seng and Kuala Lumpur 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 Keck Seng and Kuala Lumpur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keck Seng Malaysia and Kuala Lumpur Kepong, you can compare the effects of market volatilities on Keck Seng and Kuala Lumpur 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 Keck Seng with a short position of Kuala Lumpur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Kuala Lumpur.

Diversification Opportunities for Keck Seng and Kuala Lumpur

-0.14

Correlation Coefficient

Keck Seng  Kuala Lumpur

Good diversification

The 3 months correlation between Keck and Kuala is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Malaysia and Kuala Lumpur Kepong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuala Lumpur Kepong and Keck Seng 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 Keck Seng Malaysia are associated (or correlated) with Kuala Lumpur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuala Lumpur Kepong has no effect on the direction of Keck Seng i.e., Keck Seng and Kuala Lumpur go up and down completely randomly.

Pair Corralation between Keck Seng and Kuala Lumpur

Assuming the 90 days trading horizon Keck Seng Malaysia is expected to generate 1.01 times more return on investment than Kuala Lumpur. However, Keck Seng is 1.01 times more volatile than Kuala Lumpur Kepong. It trades about 0.03 of its potential returns per unit of risk. Kuala Lumpur Kepong is currently generating about -0.03 per unit of risk. If you would invest  556.00  in Keck Seng Malaysia on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Keck Seng Malaysia or generate 1.8% return on investment over 90 days.

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

Keck Seng Malaysia  vs.  Kuala Lumpur Kepong

Keck Seng Malaysia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keck Seng Malaysia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Keck Seng is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kuala Lumpur Kepong

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kuala Lumpur Kepong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kuala Lumpur is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Keck Seng and Kuala Lumpur

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

The idea behind Keck Seng Malaysia and Kuala Lumpur Kepong 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .