Correlation Between KE Holdings and Health Assurance

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

Diversification Opportunities for KE Holdings and Health Assurance

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KE Holdings and Health is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KE Holdings Inc and Health Assurance Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Assurance Acq 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 Health Assurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Assurance Acq has no effect on the direction of KE Holdings i.e., KE Holdings and Health Assurance go up and down completely randomly.

Pair Corralation between KE Holdings and Health Assurance

Given the investment horizon of 90 days KE Holdings is expected to generate 27.42 times more return on investment than Health Assurance. However, KE Holdings is 27.42 times more volatile than Health Assurance Acquisition. It trades about 0.05 of its potential returns per unit of risk. Health Assurance Acquisition is currently generating about 0.09 per unit of risk. If you would invest  1,687  in KE Holdings on July 7, 2022 and sell it today you would earn a total of  113.00  from holding KE Holdings or generate 6.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

KE Holdings Inc  vs.  Health Assurance Acquisition

 Performance (%) 
       Timeline  
KE Holdings 
KE Holdings Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in KE Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, KE Holdings may actually be approaching a critical reversion point that can send shares even higher in November 2022.

KE Holdings Price Channel

Health Assurance Acq 
Health Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Health Assurance Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Health Assurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Health Price Channel

KE Holdings and Health Assurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KE Holdings and Health Assurance

The main advantage of trading using opposite KE Holdings and Health Assurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KE Holdings position performs unexpectedly, Health Assurance 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 Health Assurance will offset losses from the drop in Health Assurance's long position.
KE Holdings vs. Amazon Inc
The idea behind KE Holdings and Health Assurance Acquisition 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.
Health Assurance vs. Amazon Inc
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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