Correlation Between KL Technology and RCE Capital
Can any of the company-specific risk be diversified away by investing in both KL Technology and RCE Capital 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 RCE Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and RCE Capital Berhad, you can compare the effects of market volatilities on KL Technology and RCE Capital 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 RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and RCE Capital.
Diversification Opportunities for KL Technology and RCE Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KLTE and RCE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital Berhad 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 RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of KL Technology i.e., KL Technology and RCE Capital go up and down completely randomly.
Pair Corralation between KL Technology and RCE Capital
Assuming the 90 days trading horizon KL Technology is expected to under-perform the RCE Capital. In addition to that, KL Technology is 1.07 times more volatile than RCE Capital Berhad. It trades about -0.37 of its total potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.13 per unit of volatility. If you would invest 155.00 in RCE Capital Berhad on November 3, 2024 and sell it today you would lose (6.00) from holding RCE Capital Berhad or give up 3.87% 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. RCE Capital Berhad
Performance |
| Timeline |
KL Technology and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
RCE Capital Berhad
Pair trading matchups for RCE Capital
Pair Trading with KL Technology and RCE Capital
The main advantage of trading using opposite KL Technology and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology position performs unexpectedly, RCE Capital 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 RCE Capital will offset losses from the drop in RCE Capital's long position.| KL Technology vs. Supercomnet Technologies Bhd | KL Technology vs. Systech Bhd | KL Technology vs. Diversified Gateway Solutions | KL Technology vs. Melewar Industrial Group |
| RCE Capital vs. Apex Healthcare Bhd | RCE Capital vs. DC HEALTHCARE HOLDINGS | RCE Capital vs. FARM FRESH BERHAD | RCE Capital vs. CSC Steel Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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