Correlation Between Kawan Food and Kossan Rubber
Can any of the company-specific risk be diversified away by investing in both Kawan Food and Kossan 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 Kossan 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 Kossan Rubber Industries, you can compare the effects of market volatilities on Kawan Food and Kossan 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 Kossan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Kossan Rubber.
Diversification Opportunities for Kawan Food and Kossan Rubber
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kawan and Kossan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries 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 Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of Kawan Food i.e., Kawan Food and Kossan Rubber go up and down completely randomly.
Pair Corralation between Kawan Food and Kossan Rubber
Assuming the 90 days trading horizon Kawan Food Bhd is expected to under-perform the Kossan Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Kawan Food Bhd is 3.51 times less risky than Kossan Rubber. The stock trades about -0.06 of its potential returns per unit of risk. The Kossan Rubber Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 227.00 in Kossan Rubber Industries on September 3, 2024 and sell it today you would earn a total of 21.00 from holding Kossan Rubber Industries or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawan Food Bhd vs. Kossan Rubber Industries
Performance |
| Timeline |
| Kawan Food Bhd |
| Kossan Rubber Industries |
Kawan Food and Kossan Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawan Food and Kossan Rubber
The main advantage of trading using opposite Kawan Food and Kossan Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, Kossan 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 Kossan Rubber will offset losses from the drop in Kossan Rubber's long position.| Kawan Food vs. British American Tobacco | Kawan Food vs. FARM FRESH BERHAD | Kawan Food vs. Apollo Food Holdings | Kawan Food vs. Oriental Food Industries |
| Kossan Rubber vs. Minetech Resources Bhd | Kossan Rubber vs. Swift Haulage Bhd | Kossan Rubber vs. Insas Bhd | Kossan Rubber 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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