Correlation Between Sapura Industrial and Eonmetall Group

Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and Eonmetall Group 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 Sapura Industrial and Eonmetall Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sapura Industrial and Eonmetall Group

-0.35

Correlation Coefficient

Sapura Industrial  Eonmetall Group

Very good diversification

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

Pair Corralation between Sapura Industrial and Eonmetall Group

Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 0.64 times more return on investment than Eonmetall Group. However, Sapura Industrial Bhd is 1.57 times less risky than Eonmetall Group. It trades about 0.04 of its potential returns per unit of risk. Eonmetall Group Bhd is currently generating about 0.0 per unit of risk. If you would invest  83.00  in Sapura Industrial Bhd on September 26, 2024 and sell it today you would earn a total of  3.00  from holding Sapura Industrial Bhd or generate 3.61% return on investment over 90 days.

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

Sapura Industrial Bhd  vs.  Eonmetall Group Bhd

Sapura Industrial Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapura Industrial Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sapura Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Eonmetall Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eonmetall Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Eonmetall Group 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 Sapura Industrial and Eonmetall Group

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

The idea behind Sapura Industrial Bhd and Eonmetall Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.