Correlation Between MI Technovation and Malpac Holdings

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

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

Diversification Opportunities for MI Technovation and Malpac Holdings

0.07

Correlation Coefficient

MI Technovation  Malpac Holdings

Significant diversification

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

Pair Corralation between MI Technovation and Malpac Holdings

Assuming the 90 days trading horizon MI Technovation Bhd is expected to generate 0.55 times more return on investment than Malpac Holdings. However, MI Technovation Bhd is 1.81 times less risky than Malpac Holdings. It trades about 0.12 of its potential returns per unit of risk. Malpac Holdings Bhd is currently generating about 0.05 per unit of risk. If you would invest  188.00  in MI Technovation Bhd on September 26, 2024 and sell it today you would earn a total of  35.00  from holding MI Technovation Bhd or generate 18.62% return on investment over 90 days.

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

MI Technovation Bhd  vs.  Malpac Holdings Bhd

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.

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.

Pair Trading with MI Technovation and Malpac Holdings

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

The idea behind MI Technovation Bhd and Malpac Holdings 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.