Correlation Between Kering SA and Chow Tai

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

By analyzing existing cross correlation between Kering SA and Chow Tai Fook, you can compare the effects of market volatilities on Kering SA and Chow Tai 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 Kering SA with a short position of Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kering SA and Chow Tai.

Diversification Opportunities for Kering SA and Chow Tai

0.01

Correlation Coefficient

Kering SA  Chow Tai

Significant diversification

The 3 months correlation between Kering and Chow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook and Kering SA 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 Kering SA are associated (or correlated) with Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of Kering SA i.e., Kering SA and Chow Tai go up and down completely randomly.

Pair Corralation between Kering SA and Chow Tai

Assuming the 90 days horizon Kering SA is expected to under-perform the Chow Tai. In addition to that, Kering SA is 1.08 times more volatile than Chow Tai Fook. It trades about -0.05 of its total potential returns per unit of risk. Chow Tai Fook is currently generating about 0.04 per unit of volatility. If you would invest  819.00  in Chow Tai Fook on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Chow Tai Fook or generate 5.74% return on investment over 90 days.

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

Kering SA  vs.  Chow Tai Fook

Kering SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chow Tai Fook

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chow Tai Fook are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chow Tai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kering SA and Chow Tai

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

The idea behind Kering SA and Chow Tai Fook 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.