Correlation Between Kawan Food and Sand Nisko

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

Diversification Opportunities for Kawan Food and Sand Nisko

0.37

Correlation Coefficient

Kawan Food  Sand Nisko

Weak diversification

The 3 months correlation between Kawan and Sand is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Sand Nisko Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sand Nisko Capital 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 Sand Nisko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sand Nisko Capital has no effect on the direction of Kawan Food i.e., Kawan Food and Sand Nisko go up and down completely randomly.

Pair Corralation between Kawan Food and Sand Nisko

Assuming the 90 days trading horizon Kawan Food Bhd is expected to generate 0.15 times more return on investment than Sand Nisko. However, Kawan Food Bhd is 6.75 times less risky than Sand Nisko. It trades about -0.01 of its potential returns per unit of risk. Sand Nisko Capital is currently generating about -0.17 per unit of risk. If you would invest  167.00  in Kawan Food Bhd on September 25, 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kawan Food Bhd  vs.  Sand Nisko Capital

Kawan Food Bhd

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, Kawan Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sand Nisko Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sand Nisko Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sand Nisko disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kawan Food and Sand Nisko

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

The idea behind Kawan Food Bhd and Sand Nisko Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.