Correlation Between Cengild Medical and Keck Seng

Can any of the company-specific risk be diversified away by investing in both Cengild Medical and Keck Seng 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 Cengild Medical and Keck Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cengild Medical Berhad and Keck Seng Malaysia, you can compare the effects of market volatilities on Cengild Medical and Keck Seng 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 Cengild Medical with a short position of Keck Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cengild Medical and Keck Seng.

Diversification Opportunities for Cengild Medical and Keck Seng

-0.08

Correlation Coefficient

Cengild Medical  Keck Seng

Good diversification

The 3 months correlation between Cengild and Keck is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cengild Medical Berhad and Keck Seng Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Malaysia and Cengild Medical 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 Cengild Medical Berhad are associated (or correlated) with Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Malaysia has no effect on the direction of Cengild Medical i.e., Cengild Medical and Keck Seng go up and down completely randomly.

Pair Corralation between Cengild Medical and Keck Seng

Assuming the 90 days trading horizon Cengild Medical Berhad is expected to generate 3.5 times more return on investment than Keck Seng. However, Cengild Medical is 3.5 times more volatile than Keck Seng Malaysia. It trades about 0.04 of its potential returns per unit of risk. Keck Seng Malaysia is currently generating about -0.1 per unit of risk. If you would invest  27.00  in Cengild Medical Berhad on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Cengild Medical Berhad or generate 3.7% return on investment over 90 days.

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

Cengild Medical Berhad  vs.  Keck Seng Malaysia

Cengild Medical Berhad

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cengild Medical Berhad are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Cengild Medical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Keck Seng Malaysia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keck Seng Malaysia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Keck Seng 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 Cengild Medical and Keck Seng

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

The idea behind Cengild Medical Berhad and Keck Seng Malaysia 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.