Correlation Between Tex Cycle and Sungei Bagan

Can any of the company-specific risk be diversified away by investing in both Tex Cycle and Sungei Bagan 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 Tex Cycle and Sungei Bagan into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tex Cycle and Sungei Bagan

-0.1

Correlation Coefficient

Tex Cycle  Sungei Bagan

Good diversification

The 3 months correlation between Tex and Sungei is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tex Cycle Technology and Sungei Bagan Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungei Bagan Rubber and Tex Cycle 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 Tex Cycle Technology are associated (or correlated) with Sungei Bagan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungei Bagan Rubber has no effect on the direction of Tex Cycle i.e., Tex Cycle and Sungei Bagan go up and down completely randomly.

Pair Corralation between Tex Cycle and Sungei Bagan

Assuming the 90 days trading horizon Tex Cycle Technology is expected to generate 1.51 times more return on investment than Sungei Bagan. However, Tex Cycle is 1.51 times more volatile than Sungei Bagan Rubber. It trades about -0.05 of its potential returns per unit of risk. Sungei Bagan Rubber is currently generating about -0.14 per unit of risk. If you would invest  119.00  in Tex Cycle Technology on September 25, 2024 and sell it today you would lose (7.00) from holding Tex Cycle Technology or give up 5.88% of portfolio value over 90 days.

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

Tex Cycle Technology  vs.  Sungei Bagan Rubber

Tex Cycle Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sungei Bagan Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungei Bagan Rubber 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.

Pair Trading with Tex Cycle and Sungei Bagan

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

The idea behind Tex Cycle Technology and Sungei Bagan 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.