Correlation Between KL Technology and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both KL Technology and Binasat Communications 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 Binasat Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and Binasat Communications Bhd, you can compare the effects of market volatilities on KL Technology and Binasat Communications 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 Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and Binasat Communications.
Diversification Opportunities for KL Technology and Binasat Communications
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KLTE and Binasat is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications 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 Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of KL Technology i.e., KL Technology and Binasat Communications go up and down completely randomly.
Pair Corralation between KL Technology and Binasat Communications
Assuming the 90 days trading horizon KL Technology is expected to generate 9.47 times less return on investment than Binasat Communications. But when comparing it to its historical volatility, KL Technology is 1.6 times less risky than Binasat Communications. It trades about 0.02 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Binasat Communications Bhd on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Binasat Communications Bhd or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KL Technology vs. Binasat Communications Bhd
Performance |
| Timeline |
KL Technology and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
Binasat Communications Bhd
Pair trading matchups for Binasat Communications
Pair Trading with KL Technology and Binasat Communications
The main advantage of trading using opposite KL Technology and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.| KL Technology vs. Computer Forms Bhd | KL Technology vs. Press Metal Bhd | KL Technology vs. Riverview Rubber Estates | KL Technology vs. Aurelius Technologies Bhd |
| Binasat Communications vs. Cosmos Technology International | Binasat Communications vs. Senheng New Retail | Binasat Communications vs. SFP Tech Holdings | Binasat Communications vs. Minetech Resources 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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