Correlation Between Shangri La and Genting Malaysia
Can any of the company-specific risk be diversified away by investing in both Shangri La and Genting Malaysia 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 Shangri La and Genting Malaysia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and Genting Malaysia Bhd, you can compare the effects of market volatilities on Shangri La and Genting Malaysia 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 Shangri La with a short position of Genting Malaysia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Genting Malaysia.
Diversification Opportunities for Shangri La and Genting Malaysia
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shangri and Genting is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Genting Malaysia Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genting Malaysia Bhd and Shangri La 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 Shangri La Hotels are associated (or correlated) with Genting Malaysia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genting Malaysia Bhd has no effect on the direction of Shangri La i.e., Shangri La and Genting Malaysia go up and down completely randomly.
Pair Corralation between Shangri La and Genting Malaysia
Assuming the 90 days trading horizon Shangri La Hotels is expected to generate 0.69 times more return on investment than Genting Malaysia. However, Shangri La Hotels is 1.45 times less risky than Genting Malaysia. It trades about -0.01 of its potential returns per unit of risk. Genting Malaysia Bhd is currently generating about -0.08 per unit of risk. If you would invest 203.00 in Shangri La Hotels on September 26, 2024 and sell it today you would lose (2.00) from holding Shangri La Hotels or give up 0.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shangri La Hotels vs. Genting Malaysia Bhd
Performance |
Timeline |
Shangri La Hotels |
Genting Malaysia Bhd |
Shangri La and Genting Malaysia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shangri La and Genting Malaysia
The main advantage of trading using opposite Shangri La and Genting Malaysia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Genting Malaysia 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 Genting Malaysia will offset losses from the drop in Genting Malaysia's long position.Shangri La vs. Genting Malaysia Bhd | Shangri La vs. Berjaya Food Bhd | Shangri La vs. ECM Libra Financial | Shangri La vs. Lyc Healthcare Bhd |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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