Correlation Between Daya Materials and Leader Steel
Can any of the company-specific risk be diversified away by investing in both Daya Materials and Leader Steel 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 Daya Materials and Leader Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daya Materials Bhd and Leader Steel Holdings, you can compare the effects of market volatilities on Daya Materials and Leader Steel 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 Daya Materials with a short position of Leader Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daya Materials and Leader Steel.
Diversification Opportunities for Daya Materials and Leader Steel
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daya and Leader is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Daya Materials Bhd and Leader Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Steel Holdings and Daya Materials 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 Daya Materials Bhd are associated (or correlated) with Leader Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Steel Holdings has no effect on the direction of Daya Materials i.e., Daya Materials and Leader Steel go up and down completely randomly.
Pair Corralation between Daya Materials and Leader Steel
Assuming the 90 days trading horizon Daya Materials Bhd is expected to under-perform the Leader Steel. In addition to that, Daya Materials is 1.67 times more volatile than Leader Steel Holdings. It trades about -0.07 of its total potential returns per unit of risk. Leader Steel Holdings is currently generating about 0.01 per unit of volatility. If you would invest 46.00 in Leader Steel Holdings on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Leader Steel Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daya Materials Bhd vs. Leader Steel Holdings
Performance |
| Timeline |
| Daya Materials Bhd |
| Leader Steel Holdings |
Daya Materials and Leader Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daya Materials and Leader Steel
The main advantage of trading using opposite Daya Materials and Leader Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daya Materials position performs unexpectedly, Leader Steel 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 Leader Steel will offset losses from the drop in Leader Steel's long position.| Daya Materials vs. Binasat Communications Bhd | Daya Materials vs. Shangri La Hotels | Daya Materials vs. Farm Price Holdings | Daya Materials vs. Petronas Chemicals Group |
| Leader Steel vs. Daya Materials Bhd | Leader Steel vs. CSC Steel Holdings | Leader Steel vs. Kossan Rubber Industries | Leader Steel vs. Farm Price Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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