Correlation Between Kawan Food and Duopharma Biotech
Can any of the company-specific risk be diversified away by investing in both Kawan Food and Duopharma Biotech 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 Duopharma Biotech 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 Duopharma Biotech Bhd, you can compare the effects of market volatilities on Kawan Food and Duopharma Biotech 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 Duopharma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Duopharma Biotech.
Diversification Opportunities for Kawan Food and Duopharma Biotech
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kawan and Duopharma is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Duopharma Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duopharma Biotech Bhd 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 Duopharma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duopharma Biotech Bhd has no effect on the direction of Kawan Food i.e., Kawan Food and Duopharma Biotech go up and down completely randomly.
Pair Corralation between Kawan Food and Duopharma Biotech
Assuming the 90 days trading horizon Kawan Food Bhd is expected to under-perform the Duopharma Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Kawan Food Bhd is 1.26 times less risky than Duopharma Biotech. The stock trades about -0.02 of its potential returns per unit of risk. The Duopharma Biotech Bhd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Duopharma Biotech Bhd on August 31, 2024 and sell it today you would lose (8.00) from holding Duopharma Biotech Bhd or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.18% |
| Values | Daily Returns |
Kawan Food Bhd vs. Duopharma Biotech Bhd
Performance |
| Timeline |
| Kawan Food Bhd |
| Duopharma Biotech Bhd |
Kawan Food and Duopharma Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawan Food and Duopharma Biotech
The main advantage of trading using opposite Kawan Food and Duopharma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, Duopharma Biotech 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 Duopharma Biotech will offset losses from the drop in Duopharma Biotech's long position.| Kawan Food vs. Nestle Bhd | Kawan Food vs. FGV Holdings Bhd | Kawan Food vs. British American Tobacco | Kawan Food vs. FARM FRESH BERHAD |
| Duopharma Biotech vs. Digistar Bhd | Duopharma Biotech vs. Minetech Resources Bhd | Duopharma Biotech vs. Swift Haulage Bhd | Duopharma Biotech vs. Bina Darulaman 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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