Correlation Between SSF Home and Sungei Bagan

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

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

Diversification Opportunities for SSF Home and Sungei Bagan

-0.47

Correlation Coefficient

SSF Home  Sungei Bagan

Very good diversification

The 3 months correlation between SSF and Sungei is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SSF Home Group 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 SSF Home 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 SSF Home Group 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 SSF Home i.e., SSF Home and Sungei Bagan go up and down completely randomly.

Pair Corralation between SSF Home and Sungei Bagan

Assuming the 90 days trading horizon SSF Home Group is expected to generate 1.19 times more return on investment than Sungei Bagan. However, SSF Home is 1.19 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 0.05 per unit of risk. If you would invest  26.00  in SSF Home Group on September 27, 2024 and sell it today you would earn a total of  8.00  from holding SSF Home Group or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.59%
Values	Daily Returns

SSF Home Group  vs.  Sungei Bagan Rubber

SSF Home Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSF Home Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SSF Home 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 SSF Home and Sungei Bagan

The main advantage of trading using opposite SSF Home and Sungei Bagan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSF Home 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 SSF Home Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.