Correlation Between Malpac Holdings and MI Technovation

Can any of the company-specific risk be diversified away by investing in both Malpac Holdings and MI Technovation 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 MI Technovation 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 MI Technovation Bhd, you can compare the effects of market volatilities on Malpac Holdings and MI Technovation 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 MI Technovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malpac Holdings and MI Technovation.

Diversification Opportunities for Malpac Holdings and MI Technovation

0.07

Correlation Coefficient

Malpac Holdings  MI Technovation

Significant diversification

The 3 months correlation between Malpac and 5286 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Malpac Holdings Bhd and MI Technovation Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Technovation 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 MI Technovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Technovation Bhd has no effect on the direction of Malpac Holdings i.e., Malpac Holdings and MI Technovation go up and down completely randomly.

Pair Corralation between Malpac Holdings and MI Technovation

Assuming the 90 days trading horizon Malpac Holdings Bhd is expected to generate 1.92 times more return on investment than MI Technovation. However, Malpac Holdings is 1.92 times more volatile than MI Technovation Bhd. It trades about 0.02 of its potential returns per unit of risk. MI Technovation Bhd is currently generating about -0.02 per unit of risk. If you would invest  90.00  in Malpac Holdings Bhd on September 26, 2024 and sell it today you would lose (5.00) from holding Malpac Holdings Bhd or give up 5.56% of portfolio value over 90 days.

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

Malpac Holdings Bhd  vs.  MI Technovation Bhd

Malpac Holdings Bhd

Risk-Adjusted Performance

4 of 100

Weak

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.

MI Technovation Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malpac Holdings and MI Technovation

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

The idea behind Malpac Holdings Bhd and MI Technovation 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.