Correlation Between Kawan Food and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both Kawan Food and PIE Industrial 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 Kawan Food and PIE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawan Food Bhd and PIE Industrial Bhd, you can compare the effects of market volatilities on Kawan Food and PIE Industrial 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 Kawan Food with a short position of PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and PIE Industrial.
Diversification Opportunities for Kawan Food and PIE Industrial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kawan and PIE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial Bhd and Kawan Food 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 Kawan Food Bhd are associated (or correlated) with PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Kawan Food i.e., Kawan Food and PIE Industrial go up and down completely randomly.
Pair Corralation between Kawan Food and PIE Industrial
Assuming the 90 days trading horizon Kawan Food is expected to generate 5.05 times less return on investment than PIE Industrial. But when comparing it to its historical volatility, Kawan Food Bhd is 1.38 times less risky than PIE Industrial. It trades about 0.03 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 588.00 in PIE Industrial Bhd on September 24, 2024 and sell it today you would earn a total of 20.00 from holding PIE Industrial Bhd or generate 3.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kawan Food Bhd vs. PIE Industrial Bhd
Performance |
Timeline |
Kawan Food Bhd |
PIE Industrial Bhd |
Kawan Food and PIE Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kawan Food and PIE Industrial
The main advantage of trading using opposite Kawan Food and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, PIE Industrial 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 PIE Industrial will offset losses from the drop in PIE Industrial's long position.Kawan Food vs. Awanbiru Technology Bhd | Kawan Food vs. Homeritz Bhd | Kawan Food vs. Malayan Banking Bhd | Kawan Food vs. RHB Bank Bhd |
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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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