Correlation Between Kossan Rubber and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Hong Leong 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 Hong Leong 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 Hong Leong Bank, you can compare the effects of market volatilities on Kossan Rubber and Hong Leong 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 Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Hong Leong.
Diversification Opportunities for Kossan Rubber and Hong Leong
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kossan and Hong is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank 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 Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Hong Leong go up and down completely randomly.
Pair Corralation between Kossan Rubber and Hong Leong
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 3.33 times more return on investment than Hong Leong. However, Kossan Rubber is 3.33 times more volatile than Hong Leong Bank. It trades about 0.24 of its potential returns per unit of risk. Hong Leong Bank is currently generating about -0.18 per unit of risk. If you would invest 231.00 in Kossan Rubber Industries on September 18, 2024 and sell it today you would earn a total of 31.00 from holding Kossan Rubber Industries or generate 13.42% 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. Hong Leong Bank
Performance |
| Timeline |
| Kossan Rubber Industries |
| Hong Leong Bank |
Kossan Rubber and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Hong Leong
The main advantage of trading using opposite Kossan Rubber and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| Kossan Rubber vs. Rubberex M | Kossan Rubber vs. Al Aqar Healthcare | Kossan Rubber vs. PMB Technology Bhd | Kossan Rubber vs. Digistar 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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