Correlation Between Kluang Rubber and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Kluang Rubber and Sime Darby 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 Sime Darby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kluang Rubber and Sime Darby Plantation, you can compare the effects of market volatilities on Kluang Rubber and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kluang Rubber and Sime Darby.
Diversification Opportunities for Kluang Rubber and Sime Darby
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kluang and Sime is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Kluang Rubber i.e., Kluang Rubber and Sime Darby go up and down completely randomly.
Pair Corralation between Kluang Rubber and Sime Darby
Assuming the 90 days trading horizon Kluang Rubber is expected to generate 0.4 times more return on investment than Sime Darby. However, Kluang Rubber is 2.53 times less risky than Sime Darby. It trades about -0.02 of its potential returns per unit of risk. Sime Darby Plantation is currently generating about -0.04 per unit of risk. If you would invest 570.00 in Kluang Rubber on October 29, 2024 and sell it today you would lose (1.00) from holding Kluang Rubber or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kluang Rubber vs. Sime Darby Plantation
Performance |
| Timeline |
| Kluang Rubber |
| Sime Darby Plantation |
Kluang Rubber and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kluang Rubber and Sime Darby
The main advantage of trading using opposite Kluang Rubber and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kluang Rubber position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Kluang Rubber vs. Nestle Bhd | Kluang Rubber vs. PPB Group Bhd | Kluang Rubber vs. IOI Bhd | Kluang Rubber vs. FGV Holdings Bhd |
| Sime Darby vs. Malayan Banking Bhd | Sime Darby vs. Public Bank Bhd | Sime Darby vs. Petronas Chemicals Group | Sime Darby vs. Tenaga Nasional Bhd |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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