Correlation Between Talam Transform and Public Bank

Can any of the company-specific risk be diversified away by investing in both Talam Transform and Public Bank 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 Talam Transform and Public Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Talam Transform and Public Bank

-0.21

Correlation Coefficient

Talam Transform  Public Bank

Very good diversification

The 3 months correlation between Talam and Public is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Talam Transform Bhd and Public Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Bank Bhd and Talam Transform 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 Talam Transform Bhd are associated (or correlated) with Public Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Bank Bhd has no effect on the direction of Talam Transform i.e., Talam Transform and Public Bank go up and down completely randomly.

Pair Corralation between Talam Transform and Public Bank

Assuming the 90 days trading horizon Talam Transform Bhd is expected to generate 10.87 times more return on investment than Public Bank. However, Talam Transform is 10.87 times more volatile than Public Bank Bhd. It trades about 0.06 of its potential returns per unit of risk. Public Bank Bhd is currently generating about -0.01 per unit of risk. If you would invest  2.50  in Talam Transform Bhd on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Talam Transform Bhd or generate 0.0% return on investment over 90 days.

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

Talam Transform Bhd  vs.  Public Bank Bhd

Talam Transform Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talam Transform Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Talam Transform disclosed solid returns over the last few months and may actually be approaching a breakup point.

Public Bank Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Bank Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Public Bank 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 Talam Transform and Public Bank

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

The idea behind Talam Transform Bhd and Public Bank 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.