Correlation Between Kossan Rubber and Boustead Heavy
Can any of the company-specific risk be diversified away by investing in both Kossan Rubber and Boustead Heavy 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 Boustead Heavy 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 Boustead Heavy Industries, you can compare the effects of market volatilities on Kossan Rubber and Boustead Heavy 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 Boustead Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kossan Rubber and Boustead Heavy.
Diversification Opportunities for Kossan Rubber and Boustead Heavy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kossan and Boustead is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Boustead Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boustead Heavy Industries 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 Boustead Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boustead Heavy Industries has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Boustead Heavy go up and down completely randomly.
Pair Corralation between Kossan Rubber and Boustead Heavy
Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 0.16 times more return on investment than Boustead Heavy. However, Kossan Rubber Industries is 6.23 times less risky than Boustead Heavy. It trades about 0.35 of its potential returns per unit of risk. Boustead Heavy Industries is currently generating about 0.05 per unit of risk. If you would invest 209.00 in Kossan Rubber Industries on August 30, 2024 and sell it today you would earn a total of 36.00 from holding Kossan Rubber Industries or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kossan Rubber Industries vs. Boustead Heavy Industries
Performance |
| Timeline |
| Kossan Rubber Industries |
| Boustead Heavy Industries |
Kossan Rubber and Boustead Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kossan Rubber and Boustead Heavy
The main advantage of trading using opposite Kossan Rubber and Boustead Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kossan Rubber position performs unexpectedly, Boustead Heavy 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 Boustead Heavy will offset losses from the drop in Boustead Heavy's long position.| Kossan Rubber vs. Minetech Resources Bhd | Kossan Rubber vs. Sunzen Biotech Bhd | Kossan Rubber vs. ViTrox Bhd | Kossan Rubber vs. Hengyuan Refining |
| Boustead Heavy vs. YX Precious Metals | Boustead Heavy vs. Alliance Financial Group | Boustead Heavy vs. Choo Bee Metal | Boustead Heavy vs. RHB Bank 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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