Correlation Between Kossan Rubber and Digistar Bhd
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Digistar Bhd 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 Kossan Rubber and Digistar Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kossan Rubber Industries and Digistar Bhd, you can compare the effects of market volatilities on Kossan Rubber and Digistar Bhd 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 Kossan Rubber with a short position of Digistar Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Digistar Bhd.
Diversification Opportunities for Kossan Rubber and Digistar Bhd
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kossan and Digistar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Digistar Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digistar Bhd and Kossan Rubber 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 Kossan Rubber Industries are associated (or correlated) with Digistar Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digistar Bhd has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Digistar Bhd go up and down completely randomly.
Pair Corralation between Kossan Rubber and Digistar Bhd
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 0.32 times more return on investment than Digistar Bhd. However, Kossan Rubber Industries is 3.12 times less risky than Digistar Bhd. It trades about 0.33 of its potential returns per unit of risk. Digistar Bhd is currently generating about 0.09 per unit of risk. If you would invest 214.00 in Kossan Rubber Industries on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Kossan Rubber Industries or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kossan Rubber Industries vs. Digistar Bhd
Performance |
| Timeline |
| Kossan Rubber Industries |
| Digistar Bhd |
Kossan Rubber and Digistar Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Digistar Bhd
The main advantage of trading using opposite Kossan Rubber and Digistar Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Digistar Bhd 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 Digistar Bhd will offset losses from the drop in Digistar Bhd's long position.| Kossan Rubber vs. Kawan Food Bhd | Kossan Rubber vs. Kluang Rubber | Kossan Rubber vs. K One Technology Bhd | Kossan Rubber vs. Daya Materials Bhd |
| Digistar Bhd vs. Malayan Banking Bhd | Digistar Bhd vs. Public Bank Bhd | Digistar Bhd vs. Petronas Chemicals Group | Digistar Bhd vs. Tenaga Nasional 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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