Correlation Between Kossan Rubber and Globetronics Tech

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

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

Diversification Opportunities for Kossan Rubber and Globetronics Tech

-0.51

Correlation Coefficient

Kossan Rubber  Globetronics Tech

Excellent diversification

The 3 months correlation between Kossan and Globetronics is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Globetronics Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globetronics Tech Bhd and Kossan Rubber 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 Kossan Rubber Industries are associated (or correlated) with Globetronics Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globetronics Tech Bhd has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Globetronics Tech go up and down completely randomly.

Pair Corralation between Kossan Rubber and Globetronics Tech

Assuming the 90 days trading horizon Kossan Rubber is expected to generate 1.76 times less return on investment than Globetronics Tech. But when comparing it to its historical volatility, Kossan Rubber Industries is 1.53 times less risky than Globetronics Tech. It trades about 0.17 of its potential returns per unit of risk. Globetronics Tech Bhd is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Globetronics Tech Bhd on September 27, 2024 and sell it today you would earn a total of  8.00  from holding Globetronics Tech Bhd or generate 15.09% return on investment over 90 days.

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

Kossan Rubber Industries  vs.  Globetronics Tech Bhd

Kossan Rubber Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kossan Rubber disclosed solid returns over the last few months and may actually be approaching a breakup point.

Globetronics Tech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globetronics 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kossan Rubber and Globetronics Tech

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

The idea behind Kossan Rubber Industries and Globetronics Tech 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 Anywhere module to track or share privately all of your investments from the convenience of any device.