Correlation Between Telekom Malaysia and Al Aqar

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

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

Diversification Opportunities for Telekom Malaysia and Al Aqar

-0.49

Correlation Coefficient

Telekom Malaysia  Al Aqar

Very good diversification

The 3 months correlation between Telekom and 5116 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telekom Malaysia Bhd and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare and Telekom 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 Telekom Malaysia Bhd are associated (or correlated) with Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of Telekom Malaysia i.e., Telekom Malaysia and Al Aqar go up and down completely randomly.

Pair Corralation between Telekom Malaysia and Al Aqar

Assuming the 90 days trading horizon Telekom Malaysia Bhd is expected to under-perform the Al Aqar. But the stock apears to be less risky and, when comparing its historical volatility, Telekom Malaysia Bhd is 1.11 times less risky than Al Aqar. The stock trades about 0.0 of its potential returns per unit of risk. The Al Aqar Healthcare is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Al Aqar Healthcare on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Al Aqar Healthcare or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Telekom Malaysia Bhd  vs.  Al Aqar Healthcare

Telekom Malaysia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Al Aqar Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Al Aqar Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Al Aqar 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 Telekom Malaysia and Al Aqar

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

The idea behind Telekom Malaysia Bhd and Al Aqar Healthcare 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.