Correlation Between Kossan Rubber and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Melewar Industrial 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 Melewar Industrial 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 Melewar Industrial Group, you can compare the effects of market volatilities on Kossan Rubber and Melewar Industrial 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 Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Melewar Industrial.
Diversification Opportunities for Kossan Rubber and Melewar Industrial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kossan and Melewar is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial 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 Melewar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melewar Industrial has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Melewar Industrial go up and down completely randomly.
Pair Corralation between Kossan Rubber and Melewar Industrial
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 1.09 times more return on investment than Melewar Industrial. However, Kossan Rubber is 1.09 times more volatile than Melewar Industrial Group. It trades about 0.1 of its potential returns per unit of risk. Melewar Industrial Group is currently generating about -0.05 per unit of risk. If you would invest 207.00 in Kossan Rubber Industries on October 25, 2024 and sell it today you would earn a total of 31.00 from holding Kossan Rubber Industries or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kossan Rubber Industries vs. Melewar Industrial Group
Performance |
| Timeline |
| Kossan Rubber Industries |
| Melewar Industrial |
Kossan Rubber and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Melewar Industrial
The main advantage of trading using opposite Kossan Rubber and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Melewar Industrial 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 Melewar Industrial will offset losses from the drop in Melewar Industrial's long position.| Kossan Rubber vs. Top Glove | Kossan Rubber vs. Hartalega Holdings Bhd | Kossan Rubber vs. Supermax Bhd | Kossan Rubber vs. Rubberex M |
| Melewar Industrial vs. YX Precious Metals | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Riverview Rubber Estates | Melewar Industrial vs. Kossan Rubber Industries |
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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