Correlation Between Shangri La and Kawan Food
Can any of the company-specific risk be diversified away by investing in both Shangri La 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 Shangri La and Kawan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and Kawan Food Bhd, you can compare the effects of market volatilities on Shangri La 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 Shangri La with a short position of Kawan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Kawan Food.
Diversification Opportunities for Shangri La and Kawan Food
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shangri and Kawan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels 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 Shangri La 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 Shangri La Hotels 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 Shangri La i.e., Shangri La and Kawan Food go up and down completely randomly.
Pair Corralation between Shangri La and Kawan Food
Assuming the 90 days trading horizon Shangri La Hotels is expected to generate 0.87 times more return on investment than Kawan Food. However, Shangri La Hotels is 1.15 times less risky than Kawan Food. It trades about -0.19 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 210.00 in Shangri La Hotels on November 5, 2024 and sell it today you would lose (7.00) from holding Shangri La Hotels or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotels vs. Kawan Food Bhd
Performance |
| Timeline |
| Shangri La Hotels |
| Kawan Food Bhd |
Shangri La and Kawan Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Kawan Food
The main advantage of trading using opposite Shangri La and Kawan Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La 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.| Shangri La vs. Dnonce Tech Bhd | Shangri La vs. Cosmos Technology International | Shangri La vs. YX Precious Metals | Shangri La vs. Berjaya Food Bhd |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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