Correlation Between Ke HoldingsInc and Hang Lung

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

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

Diversification Opportunities for Ke HoldingsInc and Hang Lung

0.1

Correlation Coefficient

Ke HoldingsInc  Hang Lung

Average diversification

The 3 months correlation between BEKE and Hang is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ke HoldingsInc and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties and Ke HoldingsInc 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 Ke HoldingsInc are associated (or correlated) with Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of Ke HoldingsInc i.e., Ke HoldingsInc and Hang Lung go up and down completely randomly.

Pair Corralation between Ke HoldingsInc and Hang Lung

Given the investment horizon of 90 days Ke HoldingsInc is expected to generate 1.14 times more return on investment than Hang Lung. However, Ke HoldingsInc is 1.14 times more volatile than Hang Lung Properties. It trades about 0.02 of its potential returns per unit of risk. Hang Lung Properties is currently generating about -0.02 per unit of risk. If you would invest  1,277  in Ke HoldingsInc on January 25, 2024 and sell it today you would earn a total of  84.00  from holding Ke HoldingsInc or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.17%
Values	Daily Returns

Ke HoldingsInc  vs.  Hang Lung Properties

Ke HoldingsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ke HoldingsInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Ke HoldingsInc is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hang Lung Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hang Lung Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ke HoldingsInc and Hang Lung

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

The idea behind Ke HoldingsInc and Hang Lung Properties 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.