Correlation Between KL Technology and Sanichi Technology
Can any of the company-specific risk be diversified away by investing in both KL Technology and Sanichi Technology 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 KL Technology and Sanichi Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and Sanichi Technology Bhd, you can compare the effects of market volatilities on KL Technology and Sanichi Technology 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 KL Technology with a short position of Sanichi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and Sanichi Technology.
Diversification Opportunities for KL Technology and Sanichi Technology
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KLTE and Sanichi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology and Sanichi Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanichi Technology Bhd and KL Technology 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 KL Technology are associated (or correlated) with Sanichi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanichi Technology Bhd has no effect on the direction of KL Technology i.e., KL Technology and Sanichi Technology go up and down completely randomly.
Pair Corralation between KL Technology and Sanichi Technology
Assuming the 90 days trading horizon KL Technology is expected to generate 355.55 times less return on investment than Sanichi Technology. But when comparing it to its historical volatility, KL Technology is 144.12 times less risky than Sanichi Technology. It trades about 0.08 of its potential returns per unit of risk. Sanichi Technology Bhd is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Sanichi Technology Bhd on October 15, 2024 and sell it today you would lose (2.00) from holding Sanichi Technology Bhd or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KL Technology vs. Sanichi Technology Bhd
Performance |
| Timeline |
KL Technology and Sanichi Technology Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
Sanichi Technology Bhd
Pair trading matchups for Sanichi Technology
Pair Trading with KL Technology and Sanichi Technology
The main advantage of trading using opposite KL Technology and Sanichi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology position performs unexpectedly, Sanichi Technology 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 Sanichi Technology will offset losses from the drop in Sanichi Technology's long position.| KL Technology vs. Carlsberg Brewery Malaysia | KL Technology vs. Central Industrial Corp | KL Technology vs. Kawan Food Bhd | KL Technology vs. Tex Cycle Technology |
| Sanichi Technology vs. Malayan Banking Bhd | Sanichi Technology vs. Binasat Communications Bhd | Sanichi Technology vs. Lotte Chemical Titan | Sanichi Technology vs. Hong Leong Bank |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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