Correlation Between Tenaga Nasional and Versatile Creative

Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and Versatile Creative 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 Tenaga Nasional and Versatile Creative into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tenaga Nasional and Versatile Creative

-0.46

Correlation Coefficient

Tenaga Nasional  Versatile Creative

Very good diversification

The 3 months correlation between Tenaga and Versatile is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and Versatile Creative Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versatile Creative Bhd and Tenaga Nasional 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 Tenaga Nasional Bhd are associated (or correlated) with Versatile Creative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versatile Creative Bhd has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and Versatile Creative go up and down completely randomly.

Pair Corralation between Tenaga Nasional and Versatile Creative

Assuming the 90 days trading horizon Tenaga Nasional Bhd is expected to under-perform the Versatile Creative. But the stock apears to be less risky and, when comparing its historical volatility, Tenaga Nasional Bhd is 1.43 times less risky than Versatile Creative. The stock trades about -0.05 of its potential returns per unit of risk. The Versatile Creative Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Versatile Creative Bhd on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Versatile Creative Bhd or generate 6.06% return on investment over 90 days.

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

Tenaga Nasional Bhd  vs.  Versatile Creative Bhd

Tenaga Nasional Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenaga Nasional Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tenaga Nasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Versatile Creative Bhd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Versatile Creative Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Versatile Creative may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tenaga Nasional and Versatile Creative

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

The idea behind Tenaga Nasional Bhd and Versatile Creative 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.