Correlation Between Microlink Solutions and LPI Capital
Can any of the company-specific risk be diversified away by investing in both Microlink Solutions and LPI Capital 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 Microlink Solutions and LPI Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microlink Solutions Bhd and LPI Capital Bhd, you can compare the effects of market volatilities on Microlink Solutions and LPI Capital 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 Microlink Solutions with a short position of LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlink Solutions and LPI Capital.
Diversification Opportunities for Microlink Solutions and LPI Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microlink and LPI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Microlink Solutions Bhd and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital Bhd and Microlink Solutions 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 Microlink Solutions Bhd are associated (or correlated) with LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of Microlink Solutions i.e., Microlink Solutions and LPI Capital go up and down completely randomly.
Pair Corralation between Microlink Solutions and LPI Capital
Assuming the 90 days trading horizon Microlink Solutions Bhd is expected to generate 9.48 times more return on investment than LPI Capital. However, Microlink Solutions is 9.48 times more volatile than LPI Capital Bhd. It trades about 0.06 of its potential returns per unit of risk. LPI Capital Bhd is currently generating about -0.07 per unit of risk. If you would invest 20.00 in Microlink Solutions Bhd on September 25, 2024 and sell it today you would earn a total of 2.00 from holding Microlink Solutions Bhd or generate 10.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microlink Solutions Bhd vs. LPI Capital Bhd
Performance |
Timeline |
Microlink Solutions Bhd |
LPI Capital Bhd |
Microlink Solutions and LPI Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microlink Solutions and LPI Capital
The main advantage of trading using opposite Microlink Solutions and LPI Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microlink Solutions position performs unexpectedly, LPI Capital 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 LPI Capital will offset losses from the drop in LPI Capital's long position.Microlink Solutions vs. Malayan Banking Bhd | Microlink Solutions vs. Public Bank Bhd | Microlink Solutions vs. Petronas Chemicals Group | Microlink Solutions vs. Tenaga Nasional 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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