Correlation Between Senheng New and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both Senheng New and Kluang Rubber 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 Senheng New and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senheng New Retail and Kluang Rubber, you can compare the effects of market volatilities on Senheng New and Kluang Rubber 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 Senheng New with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and Kluang Rubber.
Diversification Opportunities for Senheng New and Kluang Rubber
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Senheng and Kluang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and Senheng New 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 Senheng New Retail are associated (or correlated) with Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of Senheng New i.e., Senheng New and Kluang Rubber go up and down completely randomly.
Pair Corralation between Senheng New and Kluang Rubber
Assuming the 90 days trading horizon Senheng New Retail is expected to under-perform the Kluang Rubber. In addition to that, Senheng New is 1.25 times more volatile than Kluang Rubber. It trades about -0.03 of its total potential returns per unit of risk. Kluang Rubber is currently generating about 0.08 per unit of volatility. If you would invest 368.00 in Kluang Rubber on September 2, 2024 and sell it today you would earn a total of 216.00 from holding Kluang Rubber or generate 58.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.61% |
| Values | Daily Returns |
Senheng New Retail vs. Kluang Rubber
Performance |
| Timeline |
| Senheng New Retail |
| Kluang Rubber |
Senheng New and Kluang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senheng New and Kluang Rubber
The main advantage of trading using opposite Senheng New and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senheng New position performs unexpectedly, Kluang Rubber 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 Kluang Rubber will offset losses from the drop in Kluang Rubber's long position.| Senheng New vs. Digistar Bhd | Senheng New vs. Minetech Resources Bhd | Senheng New vs. Swift Haulage Bhd | Senheng New vs. Bina Darulaman Bhd |
| Kluang Rubber vs. British American Tobacco | Kluang Rubber vs. FARM FRESH BERHAD | Kluang Rubber vs. Apollo Food Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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