Correlation Between Kobay Tech and Bina Darulaman

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

Diversification Opportunities for Kobay Tech and Bina Darulaman

0.63

Correlation Coefficient

Kobay Tech  Bina Darulaman

Poor diversification

The 3 months correlation between Kobay and Bina is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kobay Tech Bhd and Bina Darulaman Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bina Darulaman 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 Bina Darulaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bina Darulaman Bhd has no effect on the direction of Kobay Tech i.e., Kobay Tech and Bina Darulaman go up and down completely randomly.

Pair Corralation between Kobay Tech and Bina Darulaman

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to under-perform the Bina Darulaman. But the stock apears to be less risky and, when comparing its historical volatility, Kobay Tech Bhd is 1.31 times less risky than Bina Darulaman. The stock trades about -0.12 of its potential returns per unit of risk. The Bina Darulaman Bhd is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Bina Darulaman Bhd on December 30, 2024 and sell it today you would lose (5.00) from holding Bina Darulaman Bhd or give up 17.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kobay Tech Bhd  vs.  Bina Darulaman Bhd

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.

Bina Darulaman Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bina Darulaman 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 Kobay Tech and Bina Darulaman

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

The idea behind Kobay Tech Bhd and Bina Darulaman 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.