Correlation Between KE Holdings and Alphabet

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

Diversification Opportunities for KE Holdings and Alphabet

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between KE Holdings and Alphabet is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KE Holdings Inc and Alphabet Cl C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Cl C and KE Holdings 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 Holdings are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Cl C has no effect on the direction of KE Holdings i.e., KE Holdings and Alphabet go up and down completely randomly.

Pair Corralation between KE Holdings and Alphabet

Given the investment horizon of 90 days KE Holdings is expected to generate 1.61 times more return on investment than Alphabet. However, KE Holdings is 1.61 times more volatile than Alphabet Cl C. It trades about -0.04 of its potential returns per unit of risk. Alphabet Cl C is currently generating about -0.16 per unit of risk. If you would invest  1,780  in KE Holdings on July 9, 2022 and sell it today you would lose (65.00)  from holding KE Holdings or give up 3.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

KE Holdings Inc  vs.  Alphabet Cl C

 Performance (%) 
       Timeline  
KE Holdings 
KE Holdings Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in KE Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, KE Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

KE Holdings Price Channel

Alphabet Cl C 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alphabet Price Channel

KE Holdings and Alphabet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KE Holdings and Alphabet

The main advantage of trading using opposite KE Holdings and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KE Holdings position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.
KE Holdings vs. Amazon Inc
The idea behind KE Holdings and Alphabet Cl C 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.
Alphabet vs. Tencent Holdings
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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