Correlation Between MClean Technologies and Systech Bhd

Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Systech Bhd 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 MClean Technologies and Systech Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for MClean Technologies and Systech Bhd

0.76

Correlation Coefficient

MClean Technologies  Systech Bhd

Poor diversification

The 3 months correlation between MClean and Systech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Systech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systech Bhd and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Systech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systech Bhd has no effect on the direction of MClean Technologies i.e., MClean Technologies and Systech Bhd go up and down completely randomly.

Pair Corralation between MClean Technologies and Systech Bhd

Assuming the 90 days trading horizon MClean Technologies is expected to generate 2.2 times less return on investment than Systech Bhd. In addition to that, MClean Technologies is 1.47 times more volatile than Systech Bhd. It trades about 0.01 of its total potential returns per unit of risk. Systech Bhd is currently generating about 0.03 per unit of volatility. If you would invest  31.00  in Systech Bhd on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Systech Bhd or generate 3.23% return on investment over 90 days.

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

MClean Technologies Bhd  vs.  Systech Bhd

MClean Technologies Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Systech Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Systech Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Systech Bhd 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 MClean Technologies and Systech Bhd

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

The idea behind MClean Technologies Bhd and Systech 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.