Correlation Between Kobay Tech and Press Metal

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

Diversification Opportunities for Kobay Tech and Press Metal

0.63

Correlation Coefficient

Kobay Tech  Press Metal

Poor diversification

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

Pair Corralation between Kobay Tech and Press Metal

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to under-perform the Press Metal. In addition to that, Kobay Tech is 1.91 times more volatile than Press Metal Bhd. It trades about -0.05 of its total potential returns per unit of risk. Press Metal Bhd is currently generating about -0.03 per unit of volatility. If you would invest  487.00  in Press Metal Bhd on September 3, 2024 and sell it today you would lose (23.00) from holding Press Metal Bhd or give up 4.72% of portfolio value over 90 days.

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

Kobay Tech Bhd  vs.  Press Metal Bhd

Kobay Tech Bhd

Risk-Adjusted Performance

0 of 100

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 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.

Press Metal Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Press Metal Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Press Metal 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 Press Metal

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

The idea behind Kobay Tech Bhd and Press Metal 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.