Correlation Between Saudee Group and Keck Seng

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

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

Diversification Opportunities for Saudee Group and Keck Seng

-0.09

Correlation Coefficient

Saudee Group  Keck Seng

Good diversification

The 3 months correlation between Saudee and Keck is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Saudee Group Bhd and Keck Seng Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Malaysia and Saudee Group 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 Saudee Group Bhd 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 Malaysia has no effect on the direction of Saudee Group i.e., Saudee Group and Keck Seng go up and down completely randomly.

Pair Corralation between Saudee Group and Keck Seng

Assuming the 90 days trading horizon Saudee Group Bhd is expected to generate 24.43 times more return on investment than Keck Seng. However, Saudee Group is 24.43 times more volatile than Keck Seng Malaysia. It trades about 0.16 of its potential returns per unit of risk. Keck Seng Malaysia is currently generating about 0.03 per unit of risk. If you would invest  1.50  in Saudee Group Bhd on September 24, 2024 and sell it today you would earn a total of  0.50  from holding Saudee Group Bhd or generate 33.33% return on investment over 90 days.

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

Saudee Group Bhd  vs.  Keck Seng Malaysia

Saudee Group Bhd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saudee Group Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Saudee Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Keck Seng Malaysia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keck Seng Malaysia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Keck Seng is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Saudee Group and Keck Seng

The main advantage of trading using opposite Saudee Group and Keck Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saudee Group 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 Saudee Group Bhd and Keck Seng Malaysia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.