Correlation Between BP Plastics and Kawan Food
Can any of the company-specific risk be diversified away by investing in both BP Plastics 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 BP Plastics and Kawan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Plastics Holding and Kawan Food Bhd, you can compare the effects of market volatilities on BP Plastics 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 BP Plastics with a short position of Kawan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and Kawan Food.
Diversification Opportunities for BP Plastics and Kawan Food
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between 5100 and Kawan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding 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 BP Plastics 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 BP Plastics Holding 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 BP Plastics i.e., BP Plastics and Kawan Food go up and down completely randomly.
Pair Corralation between BP Plastics and Kawan Food
Assuming the 90 days trading horizon BP Plastics Holding is expected to under-perform the Kawan Food. In addition to that, BP Plastics is 1.26 times more volatile than Kawan Food Bhd. It trades about -0.24 of its total potential returns per unit of risk. Kawan Food Bhd is currently generating about -0.09 per unit of volatility. If you would invest 163.00 in Kawan Food Bhd on November 1, 2024 and sell it today you would lose (3.00) from holding Kawan Food Bhd or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Plastics Holding vs. Kawan Food Bhd
Performance |
| Timeline |
| BP Plastics Holding |
| Kawan Food Bhd |
BP Plastics and Kawan Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plastics and Kawan Food
The main advantage of trading using opposite BP Plastics and Kawan Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics 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.| BP Plastics vs. K One Technology Bhd | BP Plastics vs. Diversified Gateway Solutions | BP Plastics vs. Dnonce Tech Bhd | BP Plastics vs. Berjaya Food Bhd |
| Kawan Food vs. Southern Steel Bhd | Kawan Food vs. Awanbiru Technology Bhd | Kawan Food vs. BP Plastics Holding | Kawan Food vs. CPE Technology Berhad |
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 CEOs Directory module to screen CEOs from public companies around the world.
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