Correlation Between Sime Darby and MTouche Technology
Can any of the company-specific risk be diversified away by investing in both Sime Darby and MTouche Technology 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 Sime Darby and MTouche Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sime Darby Plantation and mTouche Technology Bhd, you can compare the effects of market volatilities on Sime Darby and MTouche Technology 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 Sime Darby with a short position of MTouche Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and MTouche Technology.
Diversification Opportunities for Sime Darby and MTouche Technology
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sime and MTouche is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and mTouche Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mTouche Technology Bhd and Sime Darby 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 Sime Darby Plantation are associated (or correlated) with MTouche Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mTouche Technology Bhd has no effect on the direction of Sime Darby i.e., Sime Darby and MTouche Technology go up and down completely randomly.
Pair Corralation between Sime Darby and MTouche Technology
Assuming the 90 days trading horizon Sime Darby is expected to generate 1.97 times less return on investment than MTouche Technology. But when comparing it to its historical volatility, Sime Darby Plantation is 4.52 times less risky than MTouche Technology. It trades about 0.08 of its potential returns per unit of risk. mTouche Technology Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.00 in mTouche Technology Bhd on September 15, 2024 and sell it today you would earn a total of 0.00 from holding mTouche Technology Bhd or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Sime Darby Plantation vs. mTouche Technology Bhd
Performance |
Timeline |
Sime Darby Plantation |
mTouche Technology Bhd |
Sime Darby and MTouche Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sime Darby and MTouche Technology
The main advantage of trading using opposite Sime Darby and MTouche Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, MTouche Technology 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 MTouche Technology will offset losses from the drop in MTouche Technology's long position.Sime Darby vs. Leader Steel Holdings | Sime Darby vs. Al Aqar Healthcare | Sime Darby vs. SFP Tech Holdings | Sime Darby vs. Magni Tech Industries |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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