Correlation Between Top Glove and Rubberex M
Can any of the company-specific risk be diversified away by investing in both Top Glove and Rubberex M 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 Top Glove and Rubberex M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and Rubberex M, you can compare the effects of market volatilities on Top Glove and Rubberex M 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 Top Glove with a short position of Rubberex M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and Rubberex M.
Diversification Opportunities for Top Glove and Rubberex M
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Top and Rubberex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M and Top Glove 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 Top Glove are associated (or correlated) with Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of Top Glove i.e., Top Glove and Rubberex M go up and down completely randomly.
Pair Corralation between Top Glove and Rubberex M
Assuming the 90 days trading horizon Top Glove is expected to under-perform the Rubberex M. But the stock apears to be less risky and, when comparing its historical volatility, Top Glove is 1.36 times less risky than Rubberex M. The stock trades about -0.27 of its potential returns per unit of risk. The Rubberex M is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Rubberex M on November 5, 2024 and sell it today you would lose (2.00) from holding Rubberex M or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Glove vs. Rubberex M
Performance |
| Timeline |
| Top Glove |
| Rubberex M |
Top Glove and Rubberex M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and Rubberex M
The main advantage of trading using opposite Top Glove and Rubberex M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, Rubberex M 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 Rubberex M will offset losses from the drop in Rubberex M's long position.| Top Glove vs. Sungei Bagan Rubber | Top Glove vs. Choo Bee Metal | Top Glove vs. Petronas Chemicals Group | Top Glove vs. Rubberex M |
| Rubberex M vs. Top Glove | Rubberex M vs. Hartalega Holdings Bhd | Rubberex M vs. Kossan Rubber Industries | Rubberex M vs. Supermax Bhd |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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