Correlation Between Kossan Rubber and Farm Price
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Farm Price 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 Farm Price 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 Farm Price Holdings, you can compare the effects of market volatilities on Kossan Rubber and Farm Price 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 Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Farm Price.
Diversification Opportunities for Kossan Rubber and Farm Price
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kossan and Farm is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Farm Price Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Price Holdings 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 Farm Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Price Holdings has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Farm Price go up and down completely randomly.
Pair Corralation between Kossan Rubber and Farm Price
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 1.93 times more return on investment than Farm Price. However, Kossan Rubber is 1.93 times more volatile than Farm Price Holdings. It trades about -0.16 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.57 per unit of risk. If you would invest 271.00 in Kossan Rubber Industries on October 24, 2024 and sell it today you would lose (28.00) from holding Kossan Rubber Industries or give up 10.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kossan Rubber Industries vs. Farm Price Holdings
Performance |
| Timeline |
| Kossan Rubber Industries |
| Farm Price Holdings |
Kossan Rubber and Farm Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Farm Price
The main advantage of trading using opposite Kossan Rubber and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Farm Price 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 Farm Price will offset losses from the drop in Farm Price's long position.| Kossan Rubber vs. Top Glove | Kossan Rubber vs. Hartalega Holdings Bhd | Kossan Rubber vs. Supermax Bhd | Kossan Rubber vs. Rubberex M |
| Farm Price vs. Al Aqar Healthcare | Farm Price vs. Senheng New Retail | Farm Price vs. Kossan Rubber Industries | Farm Price vs. ECM Libra Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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