Correlation Between Sand Nisko and Kluang Rubber

Can any of the company-specific risk be diversified away by investing in both Sand Nisko and Kluang 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 Sand Nisko and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sand Nisko Capital and Kluang Rubber, you can compare the effects of market volatilities on Sand Nisko and Kluang 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 Sand Nisko with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sand Nisko and Kluang Rubber.

Diversification Opportunities for Sand Nisko and Kluang Rubber

0.18

Correlation Coefficient

Sand Nisko  Kluang Rubber

Average diversification

The 3 months correlation between Sand and Kluang is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sand Nisko Capital and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and Sand Nisko 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 Sand Nisko Capital are associated (or correlated) with Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of Sand Nisko i.e., Sand Nisko and Kluang Rubber go up and down completely randomly.

Pair Corralation between Sand Nisko and Kluang Rubber

Assuming the 90 days trading horizon Sand Nisko Capital is expected to generate 26.05 times more return on investment than Kluang Rubber. However, Sand Nisko is 26.05 times more volatile than Kluang Rubber. It trades about 0.1 of its potential returns per unit of risk. Kluang Rubber is currently generating about -0.06 per unit of risk. If you would invest  28.00  in Sand Nisko Capital on September 25, 2024 and sell it today you would lose (17.00) from holding Sand Nisko Capital or give up 60.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Sand Nisko Capital  vs.  Kluang Rubber

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.

Kluang Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kluang Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kluang Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sand Nisko and Kluang Rubber

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

The idea behind Sand Nisko Capital and Kluang Rubber 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.