Correlation Between Kawan Food and Riverview Rubber
Can any of the company-specific risk be diversified away by investing in both Kawan Food and Riverview Rubber 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 Kawan Food and Riverview Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawan Food Bhd and Riverview Rubber Estates, you can compare the effects of market volatilities on Kawan Food and Riverview Rubber 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 Kawan Food with a short position of Riverview Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Riverview Rubber.
Diversification Opportunities for Kawan Food and Riverview Rubber
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kawan and Riverview is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Riverview Rubber Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverview Rubber Estates and Kawan Food 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 Kawan Food Bhd are associated (or correlated) with Riverview Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverview Rubber Estates has no effect on the direction of Kawan Food i.e., Kawan Food and Riverview Rubber go up and down completely randomly.
Pair Corralation between Kawan Food and Riverview Rubber
Assuming the 90 days trading horizon Kawan Food Bhd is expected to generate 0.45 times more return on investment than Riverview Rubber. However, Kawan Food Bhd is 2.2 times less risky than Riverview Rubber. It trades about -0.03 of its potential returns per unit of risk. Riverview Rubber Estates is currently generating about -0.08 per unit of risk. If you would invest 166.00 in Kawan Food Bhd on September 12, 2024 and sell it today you would lose (1.00) from holding Kawan Food Bhd or give up 0.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Kawan Food Bhd vs. Riverview Rubber Estates
Performance |
Timeline |
Kawan Food Bhd |
Riverview Rubber Estates |
Kawan Food and Riverview Rubber Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kawan Food and Riverview Rubber
The main advantage of trading using opposite Kawan Food and Riverview Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, Riverview Rubber 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 Riverview Rubber will offset losses from the drop in Riverview Rubber's long position.Kawan Food vs. Public Bank Bhd | Kawan Food vs. RHB Bank Bhd | Kawan Food vs. Eonmetall Group Bhd | Kawan Food vs. Binasat Communications Bhd |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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