Correlation Between Ke Holdings and MDJM

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

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

Diversification Opportunities for Ke Holdings and MDJM

0.77

Correlation Coefficient

Ke Holdings  MDJM

Poor diversification

The 3 months correlation between BEKE and MDJM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Ke Holdings i.e., Ke Holdings and MDJM go up and down completely randomly.

Pair Corralation between Ke Holdings and MDJM

Given the investment horizon of 90 days Ke Holdings is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Ke Holdings is 6.03 times less risky than MDJM. The stock trades about -0.66 of its potential returns per unit of risk. The MDJM is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  20.00  in MDJM on October 10, 2024 and sell it today you would lose (1.00) from holding MDJM or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.43%
Values	Daily Returns

Ke Holdings  vs.  MDJM

Ke Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ke Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MDJM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ke Holdings and MDJM

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

The idea behind Ke Holdings and MDJM 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.