Correlation Between Eversafe Rubber and Pesona Metro

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

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

Diversification Opportunities for Eversafe Rubber and Pesona Metro

-0.46

Correlation Coefficient

Eversafe Rubber  Pesona Metro

Very good diversification

The 3 months correlation between Eversafe and Pesona is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eversafe Rubber Bhd and Pesona Metro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesona Metro Holdings and Eversafe 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 Eversafe Rubber Bhd are associated (or correlated) with Pesona Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesona Metro Holdings has no effect on the direction of Eversafe Rubber i.e., Eversafe Rubber and Pesona Metro go up and down completely randomly.

Pair Corralation between Eversafe Rubber and Pesona Metro

Assuming the 90 days trading horizon Eversafe Rubber Bhd is expected to under-perform the Pesona Metro. In addition to that, Eversafe Rubber is 1.89 times more volatile than Pesona Metro Holdings. It trades about -0.04 of its total potential returns per unit of risk. Pesona Metro Holdings is currently generating about 0.12 per unit of volatility. If you would invest  26.00  in Pesona Metro Holdings on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Pesona Metro Holdings or generate 19.23% return on investment over 90 days.

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

Eversafe Rubber Bhd  vs.  Pesona Metro Holdings

Eversafe Rubber Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eversafe Rubber Bhd 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.

Pesona Metro Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pesona Metro Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pesona Metro disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eversafe Rubber and Pesona Metro

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

The idea behind Eversafe Rubber Bhd and Pesona Metro Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.