Correlation Between Kobay Tech and Malpac Holdings

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

Diversification Opportunities for Kobay Tech and Malpac Holdings

-0.26

Correlation Coefficient

Kobay Tech  Malpac Holdings

Very good diversification

The 3 months correlation between Kobay and Malpac is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kobay Tech Bhd and Malpac Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malpac Holdings 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 Malpac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malpac Holdings Bhd has no effect on the direction of Kobay Tech i.e., Kobay Tech and Malpac Holdings go up and down completely randomly.

Pair Corralation between Kobay Tech and Malpac Holdings

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to under-perform the Malpac Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Kobay Tech Bhd is 1.8 times less risky than Malpac Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Malpac Holdings Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Malpac Holdings Bhd on October 3, 2024 and sell it today you would earn a total of  4.00  from holding Malpac Holdings Bhd or generate 4.94% 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.  Malpac Holdings 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 February 2025.

Malpac Holdings Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malpac Holdings Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Malpac Holdings 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 Malpac Holdings

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

The idea behind Kobay Tech Bhd and Malpac Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.