Correlation Between MISC Bhd and Teo Seng

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

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

Diversification Opportunities for MISC Bhd and Teo Seng

-0.36

Correlation Coefficient

MISC Bhd  Teo Seng

Very good diversification

The 3 months correlation between MISC and Teo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MISC Bhd and Teo Seng Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teo Seng Capital and MISC Bhd 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 MISC Bhd are associated (or correlated) with Teo Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teo Seng Capital has no effect on the direction of MISC Bhd i.e., MISC Bhd and Teo Seng go up and down completely randomly.

Pair Corralation between MISC Bhd and Teo Seng

Assuming the 90 days trading horizon MISC Bhd is expected to under-perform the Teo Seng. But the stock apears to be less risky and, when comparing its historical volatility, MISC Bhd is 2.34 times less risky than Teo Seng. The stock trades about -0.08 of its potential returns per unit of risk. The Teo Seng Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Teo Seng Capital on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Teo Seng Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

MISC Bhd  vs.  Teo Seng Capital

MISC Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MISC Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, MISC Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Teo Seng Capital

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teo Seng Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Teo 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 MISC Bhd and Teo Seng

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

The idea behind MISC Bhd and Teo Seng Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.