Correlation Between KeppelLimited and CK Hutchison

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

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

Diversification Opportunities for KeppelLimited and CK Hutchison

0.14

Correlation Coefficient

KeppelLimited  CK Hutchison

Average diversification

The 3 months correlation between KeppelLimited and CKHUY is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings and KeppelLimited 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 Keppel Limited are associated (or correlated) with CK Hutchison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Hutchison Holdings has no effect on the direction of KeppelLimited i.e., KeppelLimited and CK Hutchison go up and down completely randomly.

Pair Corralation between KeppelLimited and CK Hutchison

Assuming the 90 days horizon KeppelLimited is expected to generate 1.46 times less return on investment than CK Hutchison. But when comparing it to its historical volatility, Keppel Limited is 1.16 times less risky than CK Hutchison. It trades about 0.05 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  520.00  in CK Hutchison Holdings on December 20, 2024 and sell it today you would earn a total of  49.00  from holding CK Hutchison Holdings or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Keppel Limited  vs.  CK Hutchison Holdings

Keppel Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keppel Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, KeppelLimited may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CK Hutchison Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CK Hutchison may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with KeppelLimited and CK Hutchison

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

The idea behind Keppel Limited and CK Hutchison 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.