Correlation Between Kossan Rubber and Hengyuan Refining
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Hengyuan Refining 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 Hengyuan Refining 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 Hengyuan Refining, you can compare the effects of market volatilities on Kossan Rubber and Hengyuan Refining 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 Hengyuan Refining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Hengyuan Refining.
Diversification Opportunities for Kossan Rubber and Hengyuan Refining
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kossan and Hengyuan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Hengyuan Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengyuan Refining 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 Hengyuan Refining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengyuan Refining has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Hengyuan Refining go up and down completely randomly.
Pair Corralation between Kossan Rubber and Hengyuan Refining
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 1.23 times more return on investment than Hengyuan Refining. However, Kossan Rubber is 1.23 times more volatile than Hengyuan Refining. It trades about 0.32 of its potential returns per unit of risk. Hengyuan Refining is currently generating about -0.54 per unit of risk. If you would invest 215.00 in Kossan Rubber Industries on September 3, 2024 and sell it today you would earn a total of 33.00 from holding Kossan Rubber Industries or generate 15.35% 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. Hengyuan Refining
Performance |
| Timeline |
| Kossan Rubber Industries |
| Hengyuan Refining |
Kossan Rubber and Hengyuan Refining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Hengyuan Refining
The main advantage of trading using opposite Kossan Rubber and Hengyuan Refining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Hengyuan Refining 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 Hengyuan Refining will offset losses from the drop in Hengyuan Refining's long position.| Kossan Rubber vs. Minetech Resources Bhd | Kossan Rubber vs. Swift Haulage Bhd | Kossan Rubber vs. Insas Bhd | Kossan Rubber vs. Bina Darulaman Bhd |
| Hengyuan Refining vs. Eonmetall Group Bhd | Hengyuan Refining vs. Sungei Bagan Rubber | Hengyuan Refining vs. Press Metal Bhd | Hengyuan Refining vs. Central Industrial Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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