Correlation Between Daya Materials and Kobay Tech

Can any of the company-specific risk be diversified away by investing in both Daya Materials and Kobay Tech 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 Daya Materials and Kobay Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daya Materials Bhd and Kobay Tech Bhd, you can compare the effects of market volatilities on Daya Materials and Kobay Tech 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 Daya Materials with a short position of Kobay Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daya Materials and Kobay Tech.

Diversification Opportunities for Daya Materials and Kobay Tech

-0.32

Correlation Coefficient

Daya Materials  Kobay Tech

Very good diversification

The 3 months correlation between Daya and Kobay is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Daya Materials Bhd and Kobay Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kobay Tech Bhd and Daya Materials 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 Daya Materials Bhd are associated (or correlated) with Kobay Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kobay Tech Bhd has no effect on the direction of Daya Materials i.e., Daya Materials and Kobay Tech go up and down completely randomly.

Pair Corralation between Daya Materials and Kobay Tech

Assuming the 90 days trading horizon Daya Materials Bhd is expected to under-perform the Kobay Tech. In addition to that, Daya Materials is 1.56 times more volatile than Kobay Tech Bhd. It trades about -0.03 of its total potential returns per unit of risk. Kobay Tech Bhd is currently generating about 0.06 per unit of volatility. If you would invest  144.00  in Kobay Tech Bhd on October 8, 2024 and sell it today you would earn a total of  13.00  from holding Kobay Tech Bhd or generate 9.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Daya Materials Bhd  vs.  Kobay Tech Bhd

Daya Materials Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daya Materials Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kobay Tech Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kobay Tech Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kobay Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Daya Materials and Kobay Tech

The main advantage of trading using opposite Daya Materials and Kobay Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daya Materials position performs unexpectedly, Kobay Tech 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 Kobay Tech will offset losses from the drop in Kobay Tech's long position.

The idea behind Daya Materials Bhd and Kobay Tech Bhd 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.