Correlation Between Keck Seng and Citycon Oyj

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

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

Diversification Opportunities for Keck Seng and Citycon Oyj

0.24

Correlation Coefficient

Keck Seng  Citycon Oyj

Modest diversification

The 3 months correlation between Keck and Citycon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and Citycon Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citycon Oyj and Keck Seng 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 Keck Seng Investments are associated (or correlated) with Citycon Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citycon Oyj has no effect on the direction of Keck Seng i.e., Keck Seng and Citycon Oyj go up and down completely randomly.

Pair Corralation between Keck Seng and Citycon Oyj

Assuming the 90 days horizon Keck Seng Investments is expected to generate 3.36 times more return on investment than Citycon Oyj. However, Keck Seng is 3.36 times more volatile than Citycon Oyj. It trades about 0.05 of its potential returns per unit of risk. Citycon Oyj is currently generating about -0.05 per unit of risk. If you would invest  12.00  in Keck Seng Investments on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Keck Seng Investments or generate 116.67% return on investment over 90 days.

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

Keck Seng Investments  vs.  Citycon Oyj

Keck Seng Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keck Seng Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Keck Seng is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Citycon Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citycon Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Citycon Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Keck Seng and Citycon Oyj

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

The idea behind Keck Seng Investments and Citycon Oyj 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.