Correlation Between FGV Holdings and Kluang Rubber

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FGV Holdings 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 FGV Holdings and Kluang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FGV Holdings Bhd and Kluang Rubber, you can compare the effects of market volatilities on FGV Holdings 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 FGV Holdings with a short position of Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of FGV Holdings and Kluang Rubber.

Diversification Opportunities for FGV Holdings and Kluang Rubber

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between FGV and Kluang is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FGV Holdings Bhd and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber and FGV Holdings 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 FGV Holdings Bhd 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 FGV Holdings i.e., FGV Holdings and Kluang Rubber go up and down completely randomly.

Pair Corralation between FGV Holdings and Kluang Rubber

Assuming the 90 days trading horizon FGV Holdings Bhd is expected to generate 0.97 times more return on investment than Kluang Rubber. However, FGV Holdings Bhd is 1.03 times less risky than Kluang Rubber. It trades about 0.05 of its potential returns per unit of risk. Kluang Rubber is currently generating about -0.03 per unit of risk. If you would invest  108.00  in FGV Holdings Bhd on September 23, 2024 and sell it today you would earn a total of  4.00  from holding FGV Holdings Bhd or generate 3.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

FGV Holdings Bhd  vs.  Kluang Rubber

 Performance 
       Timeline  
FGV Holdings Bhd 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in FGV Holdings Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, FGV Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Kluang Rubber 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

FGV Holdings and Kluang Rubber Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FGV Holdings and Kluang Rubber

The main advantage of trading using opposite FGV Holdings and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FGV Holdings 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 FGV Holdings Bhd 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.
Check out your portfolio center.
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated