Correlation Between Kawan Food and Tambun Indah

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

Diversification Opportunities for Kawan Food and Tambun Indah

0.85

Correlation Coefficient

Kawan Food  Tambun Indah

Very poor diversification

The 3 months correlation between Kawan and Tambun is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Tambun Indah Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tambun Indah Land 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 Tambun Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tambun Indah Land has no effect on the direction of Kawan Food i.e., Kawan Food and Tambun Indah go up and down completely randomly.

Pair Corralation between Kawan Food and Tambun Indah

Assuming the 90 days trading horizon Kawan Food Bhd is expected to under-perform the Tambun Indah. But the stock apears to be less risky and, when comparing its historical volatility, Kawan Food Bhd is 1.19 times less risky than Tambun Indah. The stock trades about -0.21 of its potential returns per unit of risk. The Tambun Indah Land is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Tambun Indah Land on December 25, 2024 and sell it today you would lose (8.00) from holding Tambun Indah Land or give up 8.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Kawan Food Bhd  vs.  Tambun Indah Land

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.

Tambun Indah Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tambun Indah Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kawan Food and Tambun Indah

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

The idea behind Kawan Food Bhd and Tambun Indah Land 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.