Correlation Between Eversafe Rubber and K One

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

By analyzing existing cross correlation between Eversafe Rubber Bhd and K One Technology Bhd, you can compare the effects of market volatilities on Eversafe Rubber and K One 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 Eversafe Rubber with a short position of K One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversafe Rubber and K One.

Diversification Opportunities for Eversafe Rubber and K One

0.26

Correlation Coefficient

Eversafe Rubber  K One

Modest diversification

The 3 months correlation between Eversafe and 0111 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eversafe Rubber Bhd and K One Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K One Technology and Eversafe Rubber 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 Eversafe Rubber Bhd are associated (or correlated) with K One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K One Technology has no effect on the direction of Eversafe Rubber i.e., Eversafe Rubber and K One go up and down completely randomly.

Pair Corralation between Eversafe Rubber and K One

Assuming the 90 days trading horizon Eversafe Rubber Bhd is expected to under-perform the K One. But the stock apears to be less risky and, when comparing its historical volatility, Eversafe Rubber Bhd is 1.05 times less risky than K One. The stock trades about -0.04 of its potential returns per unit of risk. The K One Technology Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in K One Technology Bhd on September 12, 2024 and sell it today you would earn a total of  2.00  from holding K One Technology Bhd or generate 11.76% return on investment over 90 days.

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

Eversafe Rubber Bhd  vs.  K One Technology Bhd

Eversafe Rubber Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eversafe Rubber Bhd 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.

K One Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in K One Technology Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, K One disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eversafe Rubber and K One

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

The idea behind Eversafe Rubber Bhd and K One Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.