Correlation Between Genting Malaysia and Choo Bee

Can any of the company-specific risk be diversified away by investing in both Genting Malaysia and Choo Bee 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 Genting Malaysia and Choo Bee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genting Malaysia Bhd and Choo Bee Metal, you can compare the effects of market volatilities on Genting Malaysia and Choo Bee 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 Genting Malaysia with a short position of Choo Bee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genting Malaysia and Choo Bee.

Diversification Opportunities for Genting Malaysia and Choo Bee

0.84

Correlation Coefficient

Genting Malaysia  Choo Bee

Very poor diversification

The 3 months correlation between Genting and Choo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Genting Malaysia Bhd and Choo Bee Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choo Bee Metal and Genting Malaysia 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 Genting Malaysia Bhd are associated (or correlated) with Choo Bee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choo Bee Metal has no effect on the direction of Genting Malaysia i.e., Genting Malaysia and Choo Bee go up and down completely randomly.

Pair Corralation between Genting Malaysia and Choo Bee

Assuming the 90 days trading horizon Genting Malaysia Bhd is expected to generate 0.66 times more return on investment than Choo Bee. However, Genting Malaysia Bhd is 1.5 times less risky than Choo Bee. It trades about -0.08 of its potential returns per unit of risk. Choo Bee Metal is currently generating about -0.09 per unit of risk. If you would invest  242.00  in Genting Malaysia Bhd on September 28, 2024 and sell it today you would lose (18.00) from holding Genting Malaysia Bhd or give up 7.44% of portfolio value over 90 days.

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

Genting Malaysia Bhd  vs.  Choo Bee Metal

Genting Malaysia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genting Malaysia Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Choo Bee Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choo Bee Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Genting Malaysia and Choo Bee

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

The idea behind Genting Malaysia Bhd and Choo Bee Metal 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..