Correlation Between Keck Seng and QL Resources

Can any of the company-specific risk be diversified away by investing in both Keck Seng and QL Resources 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 QL Resources 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 QL Resources Bhd, you can compare the effects of market volatilities on Keck Seng and QL Resources 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 QL Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and QL Resources.

Diversification Opportunities for Keck Seng and QL Resources

-0.44

Correlation Coefficient

Keck Seng  QL Resources

Very good diversification

The 3 months correlation between Keck and 7084 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Malaysia and QL Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QL Resources Bhd 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 QL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QL Resources Bhd has no effect on the direction of Keck Seng i.e., Keck Seng and QL Resources go up and down completely randomly.

Pair Corralation between Keck Seng and QL Resources

Assuming the 90 days trading horizon Keck Seng Malaysia is expected to under-perform the QL Resources. But the stock apears to be less risky and, when comparing its historical volatility, Keck Seng Malaysia is 1.19 times less risky than QL Resources. The stock trades about -0.01 of its potential returns per unit of risk. The QL Resources Bhd is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  441.00  in QL Resources Bhd on September 5, 2024 and sell it today you would earn a total of  48.00  from holding QL Resources Bhd or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Keck Seng Malaysia  vs.  QL Resources Bhd

Keck Seng Malaysia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keck Seng Malaysia has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

QL Resources Bhd

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QL Resources Bhd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, QL Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Keck Seng and QL Resources

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

The idea behind Keck Seng Malaysia and QL Resources Bhd 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.