Correlation Between Kluang Rubber and Kawan Food
Can any of the company-specific risk be diversified away by investing in both Kluang Rubber and Kawan Food 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 Kawan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kluang Rubber and Kawan Food Bhd, you can compare the effects of market volatilities on Kluang Rubber and Kawan Food 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 Kawan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kluang Rubber and Kawan Food.
Diversification Opportunities for Kluang Rubber and Kawan Food
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kluang and Kawan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber and Kawan Food Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawan Food 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 Kawan Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawan Food Bhd has no effect on the direction of Kluang Rubber i.e., Kluang Rubber and Kawan Food go up and down completely randomly.
Pair Corralation between Kluang Rubber and Kawan Food
Assuming the 90 days trading horizon Kluang Rubber is expected to generate 0.59 times more return on investment than Kawan Food. However, Kluang Rubber is 1.71 times less risky than Kawan Food. It trades about 0.18 of its potential returns per unit of risk. Kawan Food Bhd is currently generating about -0.25 per unit of risk. If you would invest 568.00 in Kluang Rubber on November 5, 2024 and sell it today you would earn a total of 12.00 from holding Kluang Rubber or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kluang Rubber vs. Kawan Food Bhd
Performance |
| Timeline |
| Kluang Rubber |
| Kawan Food Bhd |
Kluang Rubber and Kawan Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kluang Rubber and Kawan Food
The main advantage of trading using opposite Kluang Rubber and Kawan Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kluang Rubber position performs unexpectedly, Kawan Food 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 Kawan Food will offset losses from the drop in Kawan Food's long position.| Kluang Rubber vs. Malayan Banking Bhd | Kluang Rubber vs. Cosmos Technology International | Kluang Rubber vs. Press Metal Bhd | Kluang Rubber vs. Cloudpoint Technology Berhad |
| Kawan Food vs. Petronas Chemicals Group | Kawan Food vs. Al Aqar Healthcare | Kawan Food vs. Greatech Technology Bhd | Kawan Food vs. Nova Wellness Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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