Correlation Between PMB Technology and Kobay Tech

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

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

Diversification Opportunities for PMB Technology and Kobay Tech

0.15

Correlation Coefficient

PMB Technology  Kobay Tech

Average diversification

The 3 months correlation between PMB and Kobay is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PMB Technology Bhd and Kobay Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kobay Tech Bhd and PMB Technology 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 PMB Technology Bhd are associated (or correlated) with Kobay Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kobay Tech Bhd has no effect on the direction of PMB Technology i.e., PMB Technology and Kobay Tech go up and down completely randomly.

Pair Corralation between PMB Technology and Kobay Tech

Assuming the 90 days trading horizon PMB Technology Bhd is expected to under-perform the Kobay Tech. But the stock apears to be less risky and, when comparing its historical volatility, PMB Technology Bhd is 1.36 times less risky than Kobay Tech. The stock trades about -0.06 of its potential returns per unit of risk. The Kobay Tech Bhd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Kobay Tech Bhd on October 24, 2024 and sell it today you would lose (181.00) from holding Kobay Tech Bhd or give up 55.69% of portfolio value over 90 days.

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

PMB Technology Bhd  vs.  Kobay Tech Bhd

PMB Technology Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PMB Technology Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, PMB Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kobay Tech Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kobay Tech Bhd are ranked lower than 4 (%) 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.

Pair Trading with PMB Technology and Kobay Tech

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

The idea behind PMB Technology Bhd and Kobay 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.