Correlation Between Kossan Rubber and KPJ Healthcare
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and KPJ Healthcare 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 KPJ Healthcare 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 KPJ Healthcare Bhd, you can compare the effects of market volatilities on Kossan Rubber and KPJ Healthcare 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 KPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and KPJ Healthcare.
Diversification Opportunities for Kossan Rubber and KPJ Healthcare
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kossan and KPJ is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and KPJ Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPJ Healthcare 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 KPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPJ Healthcare Bhd has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and KPJ Healthcare go up and down completely randomly.
Pair Corralation between Kossan Rubber and KPJ Healthcare
Assuming the 90 days trading horizon Kossan Rubber is expected to generate 1.13 times less return on investment than KPJ Healthcare. In addition to that, Kossan Rubber is 1.76 times more volatile than KPJ Healthcare Bhd. It trades about 0.32 of its total potential returns per unit of risk. KPJ Healthcare Bhd is currently generating about 0.64 per unit of volatility. If you would invest 210.00 in KPJ Healthcare Bhd on September 2, 2024 and sell it today you would earn a total of 39.00 from holding KPJ Healthcare Bhd or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kossan Rubber Industries vs. KPJ Healthcare Bhd
Performance |
| Timeline |
| Kossan Rubber Industries |
| KPJ Healthcare Bhd |
Kossan Rubber and KPJ Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and KPJ Healthcare
The main advantage of trading using opposite Kossan Rubber and KPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, KPJ Healthcare 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 KPJ Healthcare will offset losses from the drop in KPJ Healthcare's long position.| Kossan Rubber vs. Impiana Hotels Bhd | Kossan Rubber vs. Cengild Medical Berhad | Kossan Rubber vs. EA Technique M | Kossan Rubber vs. Sunzen Biotech Bhd |
| KPJ Healthcare vs. IHH Healthcare Bhd | KPJ Healthcare vs. Digistar Bhd | KPJ Healthcare vs. Minetech Resources Bhd | KPJ Healthcare vs. Swift Haulage 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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