Correlation Between Press Metal and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both Press Metal 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 Press Metal and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Press Metal Bhd and Kluang Rubber, you can compare the effects of market volatilities on Press Metal 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 Press Metal with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Press Metal and Kluang Rubber.
Diversification Opportunities for Press Metal and Kluang Rubber
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Press and Kluang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal Bhd and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and Press Metal 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 Press Metal 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 Press Metal i.e., Press Metal and Kluang Rubber go up and down completely randomly.
Pair Corralation between Press Metal and Kluang Rubber
Assuming the 90 days trading horizon Press Metal Bhd is expected to under-perform the Kluang Rubber. In addition to that, Press Metal is 2.28 times more volatile than Kluang Rubber. It trades about -0.03 of its total potential returns per unit of risk. Kluang Rubber is currently generating about -0.04 per unit of volatility. If you would invest 575.00 in Kluang Rubber on August 27, 2024 and sell it today you would lose (5.00) from holding Kluang Rubber or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Press Metal Bhd vs. Kluang Rubber
Performance |
| Timeline |
| Press Metal Bhd |
| Kluang Rubber |
Press Metal and Kluang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Press Metal and Kluang Rubber
The main advantage of trading using opposite Press Metal and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Press Metal 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.The idea behind Press Metal Bhd and Kluang Rubber pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kluang Rubber vs. YX Precious Metals | Kluang Rubber vs. Al Aqar Healthcare | Kluang Rubber vs. ONETECH SOLUTIONS HOLDINGS | Kluang Rubber vs. British American Tobacco |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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