Correlation Between PPB Group and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both PPB Group and Kluang Rubber 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 PPB Group and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPB Group Bhd and Kluang Rubber, you can compare the effects of market volatilities on PPB Group and Kluang Rubber 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 PPB Group with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPB Group and Kluang Rubber.
Diversification Opportunities for PPB Group and Kluang Rubber
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PPB and Kluang is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group Bhd and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and PPB Group 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 PPB Group Bhd are associated (or correlated) with Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of PPB Group i.e., PPB Group and Kluang Rubber go up and down completely randomly.
Pair Corralation between PPB Group and Kluang Rubber
Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the Kluang Rubber. But the stock apears to be less risky and, when comparing its historical volatility, PPB Group Bhd is 1.32 times less risky than Kluang Rubber. The stock trades about -0.23 of its potential returns per unit of risk. The Kluang Rubber is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 569.00 in Kluang Rubber on September 26, 2024 and sell it today you would lose (10.00) from holding Kluang Rubber or give up 1.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
PPB Group Bhd vs. Kluang Rubber
Performance |
Timeline |
PPB Group Bhd |
Kluang Rubber |
PPB Group and Kluang Rubber Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PPB Group and Kluang Rubber
The main advantage of trading using opposite PPB Group and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group position performs unexpectedly, Kluang Rubber 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 Kluang Rubber will offset losses from the drop in Kluang Rubber's long position.PPB Group vs. ES Ceramics Technology | PPB Group vs. IHH Healthcare Bhd | PPB Group vs. DC HEALTHCARE HOLDINGS | PPB Group vs. Uchi Technologies Bhd |
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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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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