Correlation Between PPB Group and Sungei Bagan
Can any of the company-specific risk be diversified away by investing in both PPB Group 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 PPB Group and Sungei Bagan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPB Group Bhd and Sungei Bagan Rubber, you can compare the effects of market volatilities on PPB Group 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 PPB Group with a short position of Sungei Bagan. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPB Group and Sungei Bagan.
Diversification Opportunities for PPB Group and Sungei Bagan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PPB and Sungei is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group Bhd 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 PPB Group 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 PPB Group Bhd 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 PPB Group i.e., PPB Group and Sungei Bagan go up and down completely randomly.
Pair Corralation between PPB Group and Sungei Bagan
Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the Sungei Bagan. In addition to that, PPB Group is 1.27 times more volatile than Sungei Bagan Rubber. It trades about -0.23 of its total potential returns per unit of risk. Sungei Bagan Rubber is currently generating about -0.22 per unit of volatility. If you would invest 548.00 in Sungei Bagan Rubber on September 25, 2024 and sell it today you would lose (26.00) from holding Sungei Bagan Rubber or give up 4.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
PPB Group Bhd vs. Sungei Bagan Rubber
Performance |
Timeline |
PPB Group Bhd |
Sungei Bagan Rubber |
PPB Group and Sungei Bagan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PPB Group and Sungei Bagan
The main advantage of trading using opposite PPB Group and Sungei Bagan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group 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.PPB Group vs. ES Ceramics Technology | PPB Group vs. IHH Healthcare Bhd | PPB Group vs. DC HEALTHCARE HOLDINGS | PPB Group vs. Uchi Technologies Bhd |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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