Correlation Between Pentamaster Bhd and Mr D

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

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

Diversification Opportunities for Pentamaster Bhd and Mr D

-0.35

Correlation Coefficient

Pentamaster Bhd  Mr D

Very good diversification

The 3 months correlation between Pentamaster and 5296 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pentamaster Bhd and Mr D I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr D I and Pentamaster Bhd 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 Pentamaster Bhd are associated (or correlated) with Mr D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr D I has no effect on the direction of Pentamaster Bhd i.e., Pentamaster Bhd and Mr D go up and down completely randomly.

Pair Corralation between Pentamaster Bhd and Mr D

Assuming the 90 days trading horizon Pentamaster Bhd is expected to under-perform the Mr D. In addition to that, Pentamaster Bhd is 1.07 times more volatile than Mr D I. It trades about 0.0 of its total potential returns per unit of risk. Mr D I is currently generating about 0.0 per unit of volatility. If you would invest  191.00  in Mr D I on September 26, 2024 and sell it today you would lose (11.00) from holding Mr D I or give up 5.76% of portfolio value over 90 days.

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

Pentamaster Bhd  vs.  Mr D I

Pentamaster Bhd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentamaster Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pentamaster Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pentamaster Bhd and Mr D

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

The idea behind Pentamaster Bhd and Mr D I 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.