Correlation Between Ke Holdings and Hysan Development

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

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

Diversification Opportunities for Ke Holdings and Hysan Development

0.9

Correlation Coefficient

Ke Holdings  Hysan Development

Almost no diversification

The 3 months correlation between BEKE and Hysan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and Hysan Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hysan Development 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 Hysan Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hysan Development has no effect on the direction of Ke Holdings i.e., Ke Holdings and Hysan Development go up and down completely randomly.

Pair Corralation between Ke Holdings and Hysan Development

Given the investment horizon of 90 days Ke Holdings is expected to generate 1.08 times more return on investment than Hysan Development. However, Ke Holdings is 1.08 times more volatile than Hysan Development Co. It trades about 0.08 of its potential returns per unit of risk. Hysan Development Co is currently generating about 0.05 per unit of risk. If you would invest  1,849  in Ke Holdings on December 27, 2024 and sell it today you would earn a total of  270.00  from holding Ke Holdings or generate 14.6% return on investment over 90 days.

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

Ke Holdings  vs.  Hysan Development Co

Ke Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 6 (%) 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.

Hysan Development

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hysan Development Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hysan Development may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ke Holdings and Hysan Development

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

The idea behind Ke Holdings and Hysan Development Co 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.