Correlation Between Kumpulan Kitacon and Mycron Steel

Can any of the company-specific risk be diversified away by investing in both Kumpulan Kitacon and Mycron Steel 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 Kumpulan Kitacon and Mycron Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kumpulan Kitacon Berhad and Mycron Steel Bhd, you can compare the effects of market volatilities on Kumpulan Kitacon and Mycron Steel 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 Kumpulan Kitacon with a short position of Mycron Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumpulan Kitacon and Mycron Steel.

Diversification Opportunities for Kumpulan Kitacon and Mycron Steel

-0.21

Correlation Coefficient

Kumpulan Kitacon  Mycron Steel

Very good diversification

The 3 months correlation between Kumpulan and Mycron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kumpulan Kitacon Berhad and Mycron Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mycron Steel Bhd and Kumpulan Kitacon 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 Kumpulan Kitacon Berhad are associated (or correlated) with Mycron Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mycron Steel Bhd has no effect on the direction of Kumpulan Kitacon i.e., Kumpulan Kitacon and Mycron Steel go up and down completely randomly.

Pair Corralation between Kumpulan Kitacon and Mycron Steel

Assuming the 90 days trading horizon Kumpulan Kitacon Berhad is expected to generate 0.38 times more return on investment than Mycron Steel. However, Kumpulan Kitacon Berhad is 2.65 times less risky than Mycron Steel. It trades about -0.01 of its potential returns per unit of risk. Mycron Steel Bhd is currently generating about -0.06 per unit of risk. If you would invest  73.00  in Kumpulan Kitacon Berhad on December 2, 2024 and sell it today you would lose (1.00) from holding Kumpulan Kitacon Berhad or give up 1.37% of portfolio value over 90 days.

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

Kumpulan Kitacon Berhad  vs.  Mycron Steel Bhd

Kumpulan Kitacon Berhad

Risk-Adjusted Performance

Very Weak

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

Mycron Steel Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mycron Steel Bhd 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kumpulan Kitacon and Mycron Steel

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

The idea behind Kumpulan Kitacon Berhad and Mycron Steel 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.