Correlation Between Malayan Banking and Absa Group

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

By analyzing existing cross correlation between Malayan Banking Berhad and Absa Group Limited, you can compare the effects of market volatilities on Malayan Banking and Absa 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 Malayan Banking with a short position of Absa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Absa Group.

Diversification Opportunities for Malayan Banking and Absa Group

0.0

Correlation Coefficient

Malayan Banking  Absa Group

Pay attention - limited upside

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

Pair Corralation between Malayan Banking and Absa Group

If you would invest  772.00  in Absa Group Limited on September 3, 2024 and sell it today you would earn a total of  39.00  from holding Absa Group Limited or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	10.94%
Values	Daily Returns

Malayan Banking Berhad  vs.  Absa Group Limited

Malayan Banking Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malayan Banking Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Malayan Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Absa Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Absa Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Malayan Banking and Absa Group

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

The idea behind Malayan Banking Berhad and Absa Group Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.