Correlation Between Tenaga Nasional and ITMAX System

Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and ITMAX System 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 ITMAX System 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 ITMAX System Berhad, you can compare the effects of market volatilities on Tenaga Nasional and ITMAX System 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 ITMAX System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaga Nasional and ITMAX System.

Diversification Opportunities for Tenaga Nasional and ITMAX System

0.0

Correlation Coefficient

Tenaga Nasional  ITMAX System

Pay attention - limited upside

The 3 months correlation between Tenaga and ITMAX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and ITMAX System Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITMAX System Berhad 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 ITMAX System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITMAX System Berhad has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and ITMAX System go up and down completely randomly.

Pair Corralation between Tenaga Nasional and ITMAX System

Assuming the 90 days trading horizon Tenaga Nasional is expected to generate 2.79 times less return on investment than ITMAX System. But when comparing it to its historical volatility, Tenaga Nasional Bhd is 1.73 times less risky than ITMAX System. It trades about 0.09 of its potential returns per unit of risk. ITMAX System Berhad is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  220.00  in ITMAX System Berhad on September 24, 2024 and sell it today you would earn a total of  136.00  from holding ITMAX System Berhad or generate 61.82% return on investment over 90 days.

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

Tenaga Nasional Bhd  vs.  ITMAX System Berhad

Tenaga Nasional Bhd

Risk-Adjusted Performance

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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.

ITMAX System Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITMAX System Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ITMAX System 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 Tenaga Nasional and ITMAX System

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

The idea behind Tenaga Nasional Bhd and ITMAX System Berhad 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.