Correlation Between Ke Holdings and Wharf Real

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

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

Diversification Opportunities for Ke Holdings and Wharf Real

0.63

Correlation Coefficient

Ke Holdings  Wharf Real

Poor diversification

The 3 months correlation between BEKE and Wharf is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ke Holdings and Wharf Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Real Estate 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 Wharf Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Real Estate has no effect on the direction of Ke Holdings i.e., Ke Holdings and Wharf Real go up and down completely randomly.

Pair Corralation between Ke Holdings and Wharf Real

Given the investment horizon of 90 days Ke Holdings is expected to generate 1.34 times more return on investment than Wharf Real. However, Ke Holdings is 1.34 times more volatile than Wharf Real Estate. It trades about 0.1 of its potential returns per unit of risk. Wharf Real Estate is currently generating about 0.05 per unit of risk. If you would invest  1,467  in Ke Holdings on September 3, 2024 and sell it today you would earn a total of  418.00  from holding Ke Holdings or generate 28.49% return on investment over 90 days.

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

Ke Holdings  vs.  Wharf Real Estate

Ke Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 7 (%) 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.

Wharf Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wharf Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ke Holdings and Wharf Real

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

The idea behind Ke Holdings and Wharf Real Estate 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.