Correlation Between Kossan Rubber and Duopharma Biotech

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

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

Diversification Opportunities for Kossan Rubber and Duopharma Biotech

-0.32

Correlation Coefficient

Kossan Rubber  Duopharma Biotech

Very good diversification

The 3 months correlation between Kossan and Duopharma is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kossan Rubber Industries and Duopharma Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duopharma Biotech Bhd and Kossan 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 Kossan Rubber Industries are associated (or correlated) with Duopharma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duopharma Biotech Bhd has no effect on the direction of Kossan Rubber i.e., Kossan Rubber and Duopharma Biotech go up and down completely randomly.

Pair Corralation between Kossan Rubber and Duopharma Biotech

Assuming the 90 days trading horizon Kossan Rubber Industries is expected to generate 2.26 times more return on investment than Duopharma Biotech. However, Kossan Rubber is 2.26 times more volatile than Duopharma Biotech Bhd. It trades about 0.17 of its potential returns per unit of risk. Duopharma Biotech Bhd is currently generating about 0.08 per unit of risk. If you would invest  182.00  in Kossan Rubber Industries on September 12, 2024 and sell it today you would earn a total of  82.00  from holding Kossan Rubber Industries or generate 45.05% return on investment over 90 days.

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

Kossan Rubber Industries  vs.  Duopharma Biotech Bhd

Kossan Rubber Industries

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kossan Rubber disclosed solid returns over the last few months and may actually be approaching a breakup point.

Duopharma Biotech Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duopharma Biotech Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Duopharma Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kossan Rubber and Duopharma Biotech

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

The idea behind Kossan Rubber Industries and Duopharma 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.