Correlation Between Kobay Tech and Sunzen Biotech

Can any of the company-specific risk be diversified away by investing in both Kobay Tech and Sunzen Biotech 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 Kobay Tech and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kobay Tech Bhd and Sunzen Biotech Bhd, you can compare the effects of market volatilities on Kobay Tech and Sunzen Biotech 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 Kobay Tech with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kobay Tech and Sunzen Biotech.

Diversification Opportunities for Kobay Tech and Sunzen Biotech

0.19

Correlation Coefficient

Kobay Tech  Sunzen Biotech

Average diversification

The 3 months correlation between Kobay and Sunzen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kobay Tech Bhd and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and Kobay Tech 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 Kobay Tech Bhd are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of Kobay Tech i.e., Kobay Tech and Sunzen Biotech go up and down completely randomly.

Pair Corralation between Kobay Tech and Sunzen Biotech

Assuming the 90 days trading horizon Kobay Tech Bhd is expected to generate 2.27 times more return on investment than Sunzen Biotech. However, Kobay Tech is 2.27 times more volatile than Sunzen Biotech Bhd. It trades about 0.01 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.01 per unit of risk. If you would invest  154.00  in Kobay Tech Bhd on September 14, 2024 and sell it today you would lose (3.00) from holding Kobay Tech Bhd or give up 1.95% of portfolio value over 90 days.

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

Kobay Tech Bhd  vs.  Sunzen Biotech Bhd

Kobay Tech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sunzen Biotech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunzen Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunzen Biotech 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 Kobay Tech and Sunzen Biotech

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

The idea behind Kobay Tech Bhd and Sunzen Biotech 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.