Correlation Between Tadmax Resources and Pesona Metro

Can any of the company-specific risk be diversified away by investing in both Tadmax Resources and Pesona Metro 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 Tadmax Resources and Pesona Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tadmax Resources Berhad and Pesona Metro Holdings, you can compare the effects of market volatilities on Tadmax Resources and Pesona Metro 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 Tadmax Resources with a short position of Pesona Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tadmax Resources and Pesona Metro.

Diversification Opportunities for Tadmax Resources and Pesona Metro

-0.68

Correlation Coefficient

Tadmax Resources  Pesona Metro

Excellent diversification

The 3 months correlation between Tadmax and Pesona is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tadmax Resources Berhad and Pesona Metro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesona Metro Holdings and Tadmax Resources 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 Tadmax Resources Berhad are associated (or correlated) with Pesona Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesona Metro Holdings has no effect on the direction of Tadmax Resources i.e., Tadmax Resources and Pesona Metro go up and down completely randomly.

Pair Corralation between Tadmax Resources and Pesona Metro

Assuming the 90 days trading horizon Tadmax Resources Berhad is expected to under-perform the Pesona Metro. In addition to that, Tadmax Resources is 1.44 times more volatile than Pesona Metro Holdings. It trades about -0.06 of its total potential returns per unit of risk. Pesona Metro Holdings is currently generating about 0.17 per unit of volatility. If you would invest  24.00  in Pesona Metro Holdings on September 24, 2024 and sell it today you would earn a total of  7.00  from holding Pesona Metro Holdings or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Tadmax Resources Berhad  vs.  Pesona Metro Holdings

Tadmax Resources Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tadmax Resources Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pesona Metro Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pesona Metro Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pesona Metro disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tadmax Resources and Pesona Metro

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

The idea behind Tadmax Resources Berhad and Pesona Metro Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.