Correlation Between Kluang Rubber and Datasonic Group

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

Diversification Opportunities for Kluang Rubber and Datasonic Group

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kluang and Datasonic is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic Group 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 Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of Kluang Rubber i.e., Kluang Rubber and Datasonic Group go up and down completely randomly.

Pair Corralation between Kluang Rubber and Datasonic Group

Assuming the 90 days trading horizon Kluang Rubber is expected to generate 1.09 times more return on investment than Datasonic Group. However, Kluang Rubber is 1.09 times more volatile than Datasonic Group Bhd. It trades about 0.06 of its potential returns per unit of risk. Datasonic Group Bhd is currently generating about 0.0 per unit of risk. If you would invest  391.00  in Kluang Rubber on September 5, 2024 and sell it today you would earn a total of  193.00  from holding Kluang Rubber or generate 49.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy89.67%
ValuesDaily Returns

Kluang Rubber  vs.  Datasonic Group Bhd

 Performance 
       Timeline  
Kluang Rubber 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kluang Rubber are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kluang Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Datasonic Group Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kluang Rubber and Datasonic Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kluang Rubber and Datasonic Group

The main advantage of trading using opposite Kluang Rubber and Datasonic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kluang Rubber position performs unexpectedly, Datasonic Group 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 Datasonic Group will offset losses from the drop in Datasonic Group's long position.
The idea behind Kluang Rubber and Datasonic Group Bhd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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