Correlation Between Ke Holdings and Asia Pptys

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

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

Diversification Opportunities for Ke Holdings and Asia Pptys

-0.57

Correlation Coefficient

Ke Holdings  Asia Pptys

Excellent diversification

The 3 months correlation between BEKE and Asia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and Asia Pptys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pptys and Ke Holdings 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 Ke Holdings are associated (or correlated) with Asia Pptys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pptys has no effect on the direction of Ke Holdings i.e., Ke Holdings and Asia Pptys go up and down completely randomly.

Pair Corralation between Ke Holdings and Asia Pptys

Given the investment horizon of 90 days Ke Holdings is expected to generate 7.41 times less return on investment than Asia Pptys. But when comparing it to its historical volatility, Ke Holdings is 8.09 times less risky than Asia Pptys. It trades about 0.06 of its potential returns per unit of risk. Asia Pptys is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.97  in Asia Pptys on December 27, 2024 and sell it today you would lose (3.77) from holding Asia Pptys or give up 75.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Ke Holdings  vs.  Asia Pptys

Ke Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 4 (%) 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.

Asia Pptys

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pptys are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asia Pptys showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ke Holdings and Asia Pptys

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

The idea behind Ke Holdings and Asia Pptys 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.