Correlation Between Keck Seng and Microsoft

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Can any of the company-specific risk be diversified away by investing in both Keck Seng and Microsoft 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 Keck Seng and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keck Seng Investments and Microsoft, you can compare the effects of market volatilities on Keck Seng and Microsoft 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 Keck Seng with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keck Seng and Microsoft.

Diversification Opportunities for Keck Seng and Microsoft

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Keck and Microsoft is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Keck Seng Investments and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Keck Seng 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 Keck Seng Investments are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Keck Seng i.e., Keck Seng and Microsoft go up and down completely randomly.

Pair Corralation between Keck Seng and Microsoft

Assuming the 90 days horizon Keck Seng Investments is expected to generate 2.95 times more return on investment than Microsoft. However, Keck Seng is 2.95 times more volatile than Microsoft. It trades about 0.03 of its potential returns per unit of risk. Microsoft is currently generating about 0.05 per unit of risk. If you would invest  23.00  in Keck Seng Investments on December 29, 2023 and sell it today you would earn a total of  2.00  from holding Keck Seng Investments or generate 8.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy93.52%
ValuesDaily Returns

Keck Seng Investments  vs.  Microsoft

 Performance 
       Timeline  
Keck Seng Investments 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Keck Seng Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Keck Seng reported solid returns over the last few months and may actually be approaching a breakup point.
Microsoft 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Keck Seng and Microsoft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Keck Seng and Microsoft

The main advantage of trading using opposite Keck Seng and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keck Seng position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.
The idea behind Keck Seng Investments and Microsoft 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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