Correlation Between Malpac Holdings and Homeritz Bhd

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

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

Diversification Opportunities for Malpac Holdings and Homeritz Bhd

-0.21

Correlation Coefficient

Malpac Holdings  Homeritz Bhd

Very good diversification

The 3 months correlation between Malpac and Homeritz is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Malpac Holdings Bhd and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd and Malpac Holdings 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 Malpac Holdings Bhd are associated (or correlated) with Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Malpac Holdings i.e., Malpac Holdings and Homeritz Bhd go up and down completely randomly.

Pair Corralation between Malpac Holdings and Homeritz Bhd

Assuming the 90 days trading horizon Malpac Holdings Bhd is expected to under-perform the Homeritz Bhd. In addition to that, Malpac Holdings is 1.66 times more volatile than Homeritz Bhd. It trades about -0.17 of its total potential returns per unit of risk. Homeritz Bhd is currently generating about 0.18 per unit of volatility. If you would invest  54.00  in Homeritz Bhd on September 27, 2024 and sell it today you would earn a total of  3.00  from holding Homeritz Bhd or generate 5.56% return on investment over 90 days.

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

Malpac Holdings Bhd  vs.  Homeritz Bhd

Malpac Holdings Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malpac Holdings Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Malpac Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Homeritz Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Homeritz Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Homeritz Bhd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Malpac Holdings and Homeritz Bhd

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

The idea behind Malpac Holdings Bhd and Homeritz Bhd 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 Commodity Directory module to find actively traded commodities issued by global exchanges.