Correlation Between Kobay Tech and IOI Bhd

Can any of the company-specific risk be diversified away by investing in both Kobay Tech and IOI Bhd 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 IOI Bhd 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 IOI Bhd, you can compare the effects of market volatilities on Kobay Tech and IOI Bhd 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 IOI Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kobay Tech and IOI Bhd.

Diversification Opportunities for Kobay Tech and IOI Bhd

-0.13

Correlation Coefficient

Kobay Tech  IOI Bhd

Good diversification

The 3 months correlation between Kobay and IOI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kobay Tech Bhd and IOI Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOI Bhd 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 IOI Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOI Bhd has no effect on the direction of Kobay Tech i.e., Kobay Tech and IOI Bhd go up and down completely randomly.

Pair Corralation between Kobay Tech and IOI Bhd

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to generate 3.28 times more return on investment than IOI Bhd. However, Kobay Tech is 3.28 times more volatile than IOI Bhd. It trades about 0.04 of its potential returns per unit of risk. IOI Bhd is currently generating about 0.05 per unit of risk. If you would invest  144.00  in Kobay Tech Bhd on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Kobay Tech Bhd or generate 5.56% return on investment over 90 days.

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

Kobay Tech Bhd  vs.  IOI Bhd

Kobay Tech Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

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 January 2025.

IOI Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IOI Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, IOI Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kobay Tech and IOI Bhd

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

The idea behind Kobay Tech Bhd and IOI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.