Correlation Between MI Technovation and Kobay Tech

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

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

Diversification Opportunities for MI Technovation and Kobay Tech

0.84

Correlation Coefficient

MI Technovation  Kobay Tech

Very poor diversification

The 3 months correlation between 5286 and Kobay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MI Technovation 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 MI Technovation 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 MI Technovation 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 MI Technovation i.e., MI Technovation and Kobay Tech go up and down completely randomly.

Pair Corralation between MI Technovation and Kobay Tech

Assuming the 90 days trading horizon MI Technovation Bhd is expected to generate 0.85 times more return on investment than Kobay Tech. However, MI Technovation Bhd is 1.18 times less risky than Kobay Tech. It trades about 0.05 of its potential returns per unit of risk. Kobay Tech Bhd is currently generating about -0.02 per unit of risk. If you would invest  135.00  in MI Technovation Bhd on October 11, 2024 and sell it today you would earn a total of  83.00  from holding MI Technovation Bhd or generate 61.48% return on investment over 90 days.

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

MI Technovation Bhd  vs.  Kobay Tech Bhd

MI Technovation Bhd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kobay Tech Bhd

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kobay Tech Bhd are ranked lower than 3 (%) 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 MI Technovation and Kobay Tech

The main advantage of trading using opposite MI Technovation and Kobay Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Technovation 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 MI Technovation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.