Correlation Between Agora and Ke Holdings

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

By analyzing existing cross correlation between Agora Inc and Ke Holdings, you can compare the effects of market volatilities on Agora and Ke Holdings 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 Agora with a short position of Ke Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agora and Ke Holdings.

Diversification Opportunities for Agora and Ke Holdings

0.6

Correlation Coefficient

Agora  Ke Holdings

Poor diversification

The 3 months correlation between Agora and BEKE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Agora Inc and Ke Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ke Holdings and Agora 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 Agora Inc are associated (or correlated) with Ke Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ke Holdings has no effect on the direction of Agora i.e., Agora and Ke Holdings go up and down completely randomly.

Pair Corralation between Agora and Ke Holdings

Considering the 90-day investment horizon Agora Inc is expected to generate 2.62 times more return on investment than Ke Holdings. However, Agora is 2.62 times more volatile than Ke Holdings. It trades about 0.17 of its potential returns per unit of risk. Ke Holdings is currently generating about 0.1 per unit of risk. If you would invest  184.00  in Agora Inc on September 2, 2024 and sell it today you would earn a total of  332.00  from holding Agora Inc or generate 180.43% return on investment over 90 days.

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

Agora Inc  vs.  Ke Holdings

Agora Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agora Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Agora demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ke Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Ke Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agora and Ke Holdings

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

The idea behind Agora Inc and Ke Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.