Correlation Between PIE Industrial and Kossan Rubber
Can any of the company-specific risk be diversified away by investing in both PIE Industrial and Kossan 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 PIE Industrial and Kossan Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Kossan Rubber Industries, you can compare the effects of market volatilities on PIE Industrial and Kossan 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 PIE Industrial with a short position of Kossan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Kossan Rubber.
Diversification Opportunities for PIE Industrial and Kossan Rubber
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIE and Kossan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of PIE Industrial i.e., PIE Industrial and Kossan Rubber go up and down completely randomly.
Pair Corralation between PIE Industrial and Kossan Rubber
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to under-perform the Kossan Rubber. But the stock apears to be less risky and, when comparing its historical volatility, PIE Industrial Bhd is 1.62 times less risky than Kossan Rubber. The stock trades about -0.07 of its potential returns per unit of risk. The Kossan Rubber Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Kossan Rubber Industries on November 2, 2024 and sell it today you would earn a total of 33.00 from holding Kossan Rubber Industries or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIE Industrial Bhd vs. Kossan Rubber Industries
Performance |
| Timeline |
| PIE Industrial Bhd |
| Kossan Rubber Industries |
PIE Industrial and Kossan Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and Kossan Rubber
The main advantage of trading using opposite PIE Industrial and Kossan Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial position performs unexpectedly, Kossan 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 Kossan Rubber will offset losses from the drop in Kossan Rubber's long position.| PIE Industrial vs. Senheng New Retail | PIE Industrial vs. ES Ceramics Technology | PIE Industrial vs. Choo Bee Metal | PIE Industrial vs. Central Industrial Corp |
| Kossan Rubber vs. Ho Hup Construction | Kossan Rubber vs. Sapura Industrial Bhd | Kossan Rubber vs. Central Industrial Corp | Kossan Rubber vs. FARM FRESH 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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