Correlation Between Kawan Food and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both Kawan Food and Kluang Rubber 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 Kawan Food and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawan Food Bhd and Kluang Rubber, you can compare the effects of market volatilities on Kawan Food and Kluang Rubber 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 Kawan Food with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Kluang Rubber.
Diversification Opportunities for Kawan Food and Kluang Rubber
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kawan and Kluang is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and Kawan Food 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 Kawan Food Bhd are associated (or correlated) with Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of Kawan Food i.e., Kawan Food and Kluang Rubber go up and down completely randomly.
Pair Corralation between Kawan Food and Kluang Rubber
Assuming the 90 days trading horizon Kawan Food Bhd is expected to generate 0.62 times more return on investment than Kluang Rubber. However, Kawan Food Bhd is 1.62 times less risky than Kluang Rubber. It trades about 0.0 of its potential returns per unit of risk. Kluang Rubber is currently generating about -0.07 per unit of risk. If you would invest 169.00 in Kawan Food Bhd on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Kawan Food Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawan Food Bhd vs. Kluang Rubber
Performance |
| Timeline |
| Kawan Food Bhd |
| Kluang Rubber |
Kawan Food and Kluang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawan Food and Kluang Rubber
The main advantage of trading using opposite Kawan Food and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, Kluang Rubber 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 Kluang Rubber will offset losses from the drop in Kluang Rubber's long position.| Kawan Food vs. Nestle Bhd | Kawan Food vs. PPB Group Bhd | Kawan Food vs. FGV Holdings Bhd | Kawan Food vs. British American Tobacco |
| Kluang Rubber vs. Icon Offshore Bhd | Kluang Rubber vs. Press Metal Bhd | Kluang Rubber vs. Cosmos Technology International | Kluang Rubber vs. CPE Technology Berhad |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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