Correlation Between Kluang Rubber and Diversified Gateway

Can any of the company-specific risk be diversified away by investing in both Kluang Rubber and Diversified Gateway 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 Kluang Rubber and Diversified Gateway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kluang Rubber and Diversified Gateway Solutions, you can compare the effects of market volatilities on Kluang Rubber and Diversified Gateway 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 Kluang Rubber with a short position of Diversified Gateway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kluang Rubber and Diversified Gateway.

Diversification Opportunities for Kluang Rubber and Diversified Gateway

0.53

Correlation Coefficient

Kluang Rubber  Diversified Gateway

Very weak diversification

The 3 months correlation between Kluang and Diversified is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber and Diversified Gateway Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Gateway and Kluang Rubber 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 Kluang Rubber are associated (or correlated) with Diversified Gateway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Gateway has no effect on the direction of Kluang Rubber i.e., Kluang Rubber and Diversified Gateway go up and down completely randomly.

Pair Corralation between Kluang Rubber and Diversified Gateway

Assuming the 90 days trading horizon Kluang Rubber is expected to generate 0.47 times more return on investment than Diversified Gateway. However, Kluang Rubber is 2.11 times less risky than Diversified Gateway. It trades about 0.0 of its potential returns per unit of risk. Diversified Gateway Solutions is currently generating about -0.07 per unit of risk. If you would invest  588.00  in Kluang Rubber on September 3, 2024 and sell it today you would lose (4.00) from holding Kluang Rubber or give up 0.68% of portfolio value over 90 days.

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

Kluang Rubber  vs.  Diversified Gateway Solutions

Kluang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Diversified Gateway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diversified Gateway Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kluang Rubber and Diversified Gateway

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

The idea behind Kluang Rubber and Diversified Gateway Solutions 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.