Correlation Between Public Bank and K One

Can any of the company-specific risk be diversified away by investing in both Public Bank and K One 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 Public Bank and K One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Public Bank Bhd and K One Technology Bhd, you can compare the effects of market volatilities on Public Bank and K One 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 Public Bank with a short position of K One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and K One.

Diversification Opportunities for Public Bank and K One

0.6

Correlation Coefficient

Public Bank  K One

Poor diversification

The 3 months correlation between Public and 0111 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and K One Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K One Technology and Public Bank 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 Public Bank Bhd are associated (or correlated) with K One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K One Technology has no effect on the direction of Public Bank i.e., Public Bank and K One go up and down completely randomly.

Pair Corralation between Public Bank and K One

Assuming the 90 days trading horizon Public Bank is expected to generate 4.57 times less return on investment than K One. But when comparing it to its historical volatility, Public Bank Bhd is 4.72 times less risky than K One. It trades about 0.05 of its potential returns per unit of risk. K One Technology Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14.00  in K One Technology Bhd on September 3, 2024 and sell it today you would earn a total of  3.00  from holding K One Technology Bhd or generate 21.43% return on investment over 90 days.

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

Public Bank Bhd  vs.  K One Technology Bhd

Public Bank Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Bank Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Public Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

K One Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K One Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, K One is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Public Bank and K One

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

The idea behind Public Bank Bhd and K One Technology 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.