Correlation Between KeppelLimited and Teijin

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

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

Diversification Opportunities for KeppelLimited and Teijin

0.27

Correlation Coefficient

KeppelLimited  Teijin

Modest diversification

The 3 months correlation between KeppelLimited and Teijin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin 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 Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of KeppelLimited i.e., KeppelLimited and Teijin go up and down completely randomly.

Pair Corralation between KeppelLimited and Teijin

Assuming the 90 days horizon Keppel Limited is expected to generate 2.65 times more return on investment than Teijin. However, KeppelLimited is 2.65 times more volatile than Teijin. It trades about 0.07 of its potential returns per unit of risk. Teijin is currently generating about 0.05 per unit of risk. If you would invest  965.00  in Keppel Limited on December 21, 2024 and sell it today you would earn a total of  78.00  from holding Keppel Limited or generate 8.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.49%
Values	Daily Returns

Keppel Limited  vs.  Teijin

Keppel Limited

Risk-Adjusted Performance

Modest

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

Teijin

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teijin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Teijin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeppelLimited and Teijin

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

The idea behind Keppel Limited and Teijin 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.