Correlation Between Kawan Food and TIME Dotcom

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

Diversification Opportunities for Kawan Food and TIME Dotcom

-0.5

Correlation Coefficient

Kawan Food  TIME Dotcom

Very good diversification

The 3 months correlation between Kawan and TIME is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and TIME Dotcom Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIME Dotcom Bhd 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 TIME Dotcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIME Dotcom Bhd has no effect on the direction of Kawan Food i.e., Kawan Food and TIME Dotcom go up and down completely randomly.

Pair Corralation between Kawan Food and TIME Dotcom

Assuming the 90 days trading horizon Kawan Food Bhd is expected to under-perform the TIME Dotcom. But the stock apears to be less risky and, when comparing its historical volatility, Kawan Food Bhd is 1.19 times less risky than TIME Dotcom. The stock trades about -0.18 of its potential returns per unit of risk. The TIME Dotcom Bhd is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  461.00  in TIME Dotcom Bhd on December 5, 2024 and sell it today you would earn a total of  62.00  from holding TIME Dotcom Bhd or generate 13.45% return on investment over 90 days.

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

Kawan Food Bhd  vs.  TIME Dotcom Bhd

Kawan Food Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kawan Food 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.

TIME Dotcom Bhd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TIME Dotcom Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, TIME Dotcom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kawan Food and TIME Dotcom

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

The idea behind Kawan Food Bhd and TIME Dotcom 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.