Correlation Between Ke Holdings and Aztec Land

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

By analyzing existing cross correlation between Ke Holdings and Aztec Land Comb, you can compare the effects of market volatilities on Ke Holdings and Aztec Land 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 Aztec Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ke Holdings and Aztec Land.

Diversification Opportunities for Ke Holdings and Aztec Land

0.44

Correlation Coefficient

Ke Holdings  Aztec Land

Very weak diversification

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

Pair Corralation between Ke Holdings and Aztec Land

Given the investment horizon of 90 days Ke Holdings is expected to under-perform the Aztec Land. In addition to that, Ke Holdings is 1.77 times more volatile than Aztec Land Comb. It trades about -0.04 of its total potential returns per unit of risk. Aztec Land Comb is currently generating about -0.04 per unit of volatility. If you would invest  82,499  in Aztec Land Comb on September 12, 2024 and sell it today you would lose (1,874) from holding Aztec Land Comb or give up 2.27% of portfolio value over 90 days.

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

Ke Holdings  vs.  Aztec Land Comb

Ke Holdings

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 11 (%) 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.

Aztec Land Comb

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Land Comb are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Aztec Land showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ke Holdings and Aztec Land

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

The idea behind Ke Holdings and Aztec Land Comb 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.