Correlation Between Sungei Bagan and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and Malaysia Steel 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 Sungei Bagan and Malaysia Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungei Bagan Rubber and Malaysia Steel Works, you can compare the effects of market volatilities on Sungei Bagan and Malaysia Steel 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 Sungei Bagan with a short position of Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and Malaysia Steel.
Diversification Opportunities for Sungei Bagan and Malaysia Steel
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungei and Malaysia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works and Sungei Bagan 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 Sungei Bagan Rubber are associated (or correlated) with Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and Malaysia Steel go up and down completely randomly.
Pair Corralation between Sungei Bagan and Malaysia Steel
Assuming the 90 days trading horizon Sungei Bagan Rubber is expected to under-perform the Malaysia Steel. But the stock apears to be less risky and, when comparing its historical volatility, Sungei Bagan Rubber is 2.07 times less risky than Malaysia Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Malaysia Steel Works is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Malaysia Steel Works on September 25, 2024 and sell it today you would lose (1.00) from holding Malaysia Steel Works or give up 3.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sungei Bagan Rubber vs. Malaysia Steel Works
Performance |
Timeline |
Sungei Bagan Rubber |
Malaysia Steel Works |
Sungei Bagan and Malaysia Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sungei Bagan and Malaysia Steel
The main advantage of trading using opposite Sungei Bagan and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungei Bagan position performs unexpectedly, Malaysia Steel 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.Sungei Bagan vs. Nestle Bhd | Sungei Bagan vs. PPB Group Bhd | Sungei Bagan vs. IOI Bhd | Sungei Bagan vs. FGV Holdings Bhd |
Malaysia Steel vs. Press Metal Bhd | Malaysia Steel vs. PMB Technology Bhd | Malaysia Steel vs. Pantech Group Holdings | Malaysia Steel vs. CSC Steel Holdings |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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