Correlation Between Marriott International and Keck Seng

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

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

Diversification Opportunities for Marriott International and Keck Seng

-0.37

Correlation Coefficient

Marriott International  Keck Seng

Very good diversification

The 3 months correlation between Marriott and Keck is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Keck Seng Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Investments and Marriott International 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 Marriott International are associated (or correlated) with Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Investments has no effect on the direction of Marriott International i.e., Marriott International and Keck Seng go up and down completely randomly.

Pair Corralation between Marriott International and Keck Seng

Assuming the 90 days horizon Marriott International is expected to under-perform the Keck Seng. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 4.04 times less risky than Keck Seng. The stock trades about -0.04 of its potential returns per unit of risk. The Keck Seng Investments is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Keck Seng Investments on October 26, 2024 and sell it today you would earn a total of  2.00  from holding Keck Seng Investments or generate 8.33% return on investment over 90 days.

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

Marriott International  vs.  Keck Seng Investments

Marriott International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Marriott International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Marriott International and Keck Seng

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

The idea behind Marriott International and Keck Seng Investments 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.