Correlation Between Kobay Tech and Tex Cycle

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

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

Diversification Opportunities for Kobay Tech and Tex Cycle

0.85

Correlation Coefficient

Kobay Tech  Tex Cycle

Very poor diversification

The 3 months correlation between Kobay and Tex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kobay Tech Bhd and Tex Cycle Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Cycle Technology and Kobay Tech 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 Kobay Tech Bhd are associated (or correlated) with Tex Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Cycle Technology has no effect on the direction of Kobay Tech i.e., Kobay Tech and Tex Cycle go up and down completely randomly.

Pair Corralation between Kobay Tech and Tex Cycle

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to under-perform the Tex Cycle. In addition to that, Kobay Tech is 1.92 times more volatile than Tex Cycle Technology. It trades about -0.1 of its total potential returns per unit of risk. Tex Cycle Technology is currently generating about -0.09 per unit of volatility. If you would invest  112.00  in Tex Cycle Technology on December 23, 2024 and sell it today you would lose (8.00) from holding Tex Cycle Technology or give up 7.14% of portfolio value over 90 days.

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

Kobay Tech Bhd  vs.  Tex Cycle Technology

Kobay Tech Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kobay Tech 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.

Tex Cycle Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tex Cycle Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kobay Tech and Tex Cycle

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

The idea behind Kobay Tech Bhd and Tex Cycle Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.