Correlation Between Ke Holdings and PROS Holdings

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

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

Diversification Opportunities for Ke Holdings and PROS Holdings

-0.08

Correlation Coefficient

Ke Holdings  PROS Holdings

Good diversification

The 3 months correlation between BEKE and PROS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings 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 PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of Ke Holdings i.e., Ke Holdings and PROS Holdings go up and down completely randomly.

Pair Corralation between Ke Holdings and PROS Holdings

Given the investment horizon of 90 days Ke Holdings is expected to generate 1.35 times more return on investment than PROS Holdings. However, Ke Holdings is 1.35 times more volatile than PROS Holdings. It trades about 0.07 of its potential returns per unit of risk. PROS Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,852  in Ke Holdings on December 26, 2024 and sell it today you would earn a total of  217.00  from holding Ke Holdings or generate 11.72% return on investment over 90 days.

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

Ke Holdings  vs.  PROS Holdings

Ke Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 5 (%) 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.

PROS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ke Holdings and PROS Holdings

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

The idea behind Ke Holdings and PROS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.