Correlation Between Page Industries and KEI Industries

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

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

Diversification Opportunities for Page Industries and KEI Industries

0.44

Correlation Coefficient

Page Industries  KEI Industries

Very weak diversification

The 3 months correlation between Page and KEI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Page Industries Limited and KEI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEI Industries and Page Industries 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 Page Industries Limited are associated (or correlated) with KEI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEI Industries has no effect on the direction of Page Industries i.e., Page Industries and KEI Industries go up and down completely randomly.

Pair Corralation between Page Industries and KEI Industries

Assuming the 90 days trading horizon Page Industries Limited is expected to generate 0.74 times more return on investment than KEI Industries. However, Page Industries Limited is 1.34 times less risky than KEI Industries. It trades about 0.18 of its potential returns per unit of risk. KEI Industries Limited is currently generating about -0.05 per unit of risk. If you would invest  4,594,605  in Page Industries Limited on October 6, 2024 and sell it today you would earn a total of  199,515  from holding Page Industries Limited or generate 4.34% return on investment over 90 days.

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

Page Industries Limited  vs.  KEI Industries Limited

Page Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Page Industries Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Page Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

KEI Industries

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Page Industries and KEI Industries

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

The idea behind Page Industries Limited and KEI Industries Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.