Correlation Between Mr D and Press Metal

Can any of the company-specific risk be diversified away by investing in both Mr D and Press Metal 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 Mr D and Press Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mr D and Press Metal

-0.05

Correlation Coefficient

Mr D  Press Metal

Good diversification

The 3 months correlation between 5296 and Press is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mr D I and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal Bhd and Mr D 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 Mr D I are associated (or correlated) with Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Mr D i.e., Mr D and Press Metal go up and down completely randomly.

Pair Corralation between Mr D and Press Metal

Assuming the 90 days trading horizon Mr D I is expected to under-perform the Press Metal. In addition to that, Mr D is 1.14 times more volatile than Press Metal Bhd. It trades about -0.08 of its total potential returns per unit of risk. Press Metal Bhd is currently generating about -0.03 per unit of volatility. If you would invest  504.00  in Press Metal Bhd on September 28, 2024 and sell it today you would lose (24.00) from holding Press Metal Bhd or give up 4.76% of portfolio value over 90 days.

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

Mr D I  vs.  Press Metal Bhd

Mr D I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mr D I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Press Metal Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Press Metal Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Press Metal 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 Mr D and Press Metal

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

The idea behind Mr D I and Press Metal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.