Correlation Between Maui Land and Ke Holdings

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

By analyzing existing cross correlation between Maui Land Pineapple and Ke Holdings, you can compare the effects of market volatilities on Maui Land and Ke Holdings 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 Maui Land with a short position of Ke Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maui Land and Ke Holdings.

Diversification Opportunities for Maui Land and Ke Holdings

-0.52

Correlation Coefficient

Maui Land  Ke Holdings

Excellent diversification

The 3 months correlation between Maui and BEKE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Maui Land Pineapple and Ke Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ke Holdings and Maui Land 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 Maui Land Pineapple are associated (or correlated) with Ke Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ke Holdings has no effect on the direction of Maui Land i.e., Maui Land and Ke Holdings go up and down completely randomly.

Pair Corralation between Maui Land and Ke Holdings

Considering the 90-day investment horizon Maui Land Pineapple is expected to under-perform the Ke Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Maui Land Pineapple is 1.63 times less risky than Ke Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Ke Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,484  in Ke Holdings on August 30, 2024 and sell it today you would earn a total of  417.00  from holding Ke Holdings or generate 28.1% return on investment over 90 days.

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

Maui Land Pineapple  vs.  Ke Holdings

Maui Land Pineapple

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maui Land Pineapple has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Maui Land is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 weak forward-looking signals, Ke Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maui Land and Ke Holdings

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

The idea behind Maui Land Pineapple and Ke 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.