Correlation Between PMB Technology and Rubberex M

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

Diversification Opportunities for PMB Technology and Rubberex M

0.67

Correlation Coefficient

PMB Technology  Rubberex M

Poor diversification

The 3 months correlation between PMB and Rubberex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PMB Technology Bhd and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M 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 Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of PMB Technology i.e., PMB Technology and Rubberex M go up and down completely randomly.

Pair Corralation between PMB Technology and Rubberex M

Assuming the 90 days trading horizon PMB Technology Bhd is expected to under-perform the Rubberex M. But the stock apears to be less risky and, when comparing its historical volatility, PMB Technology Bhd is 2.59 times less risky than Rubberex M. The stock trades about -0.19 of its potential returns per unit of risk. The Rubberex M is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Rubberex M on December 2, 2024 and sell it today you would lose (3.00) from holding Rubberex M or give up 17.65% of portfolio value over 90 days.

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

PMB Technology Bhd  vs.  Rubberex M

PMB Technology Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days PMB Technology 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.

Rubberex M

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubberex M 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 PMB Technology and Rubberex M

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

The idea behind PMB Technology Bhd and Rubberex M 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.