Correlation Between Kluang Rubber and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both Kluang Rubber and Homeritz Bhd 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 Kluang Rubber and Homeritz Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kluang Rubber and Homeritz Bhd, you can compare the effects of market volatilities on Kluang Rubber and Homeritz Bhd 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 Kluang Rubber with a short position of Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kluang Rubber and Homeritz Bhd.
Diversification Opportunities for Kluang Rubber and Homeritz Bhd
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kluang and Homeritz is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd and Kluang Rubber 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 Kluang Rubber are associated (or correlated) with Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Kluang Rubber i.e., Kluang Rubber and Homeritz Bhd go up and down completely randomly.
Pair Corralation between Kluang Rubber and Homeritz Bhd
Assuming the 90 days trading horizon Kluang Rubber is expected to generate 1.36 times more return on investment than Homeritz Bhd. However, Kluang Rubber is 1.36 times more volatile than Homeritz Bhd. It trades about 0.1 of its potential returns per unit of risk. Homeritz Bhd is currently generating about 0.04 per unit of risk. If you would invest 365.00 in Kluang Rubber on August 27, 2024 and sell it today you would earn a total of 217.00 from holding Kluang Rubber or generate 59.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.17% |
| Values | Daily Returns |
Kluang Rubber vs. Homeritz Bhd
Performance |
| Timeline |
| Kluang Rubber |
| Homeritz Bhd |
Kluang Rubber and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kluang Rubber and Homeritz Bhd
The main advantage of trading using opposite Kluang Rubber and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kluang Rubber position performs unexpectedly, Homeritz Bhd 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.| Kluang Rubber vs. YX Precious Metals | Kluang Rubber vs. Al Aqar Healthcare | Kluang Rubber vs. ONETECH SOLUTIONS HOLDINGS | Kluang Rubber vs. British American Tobacco |
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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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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