Correlation Between ES Ceramics and Sungei Bagan
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Sungei Bagan 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 ES Ceramics and Sungei Bagan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and Sungei Bagan Rubber, you can compare the effects of market volatilities on ES Ceramics and Sungei Bagan 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 ES Ceramics with a short position of Sungei Bagan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Sungei Bagan.
Diversification Opportunities for ES Ceramics and Sungei Bagan
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between 0100 and Sungei is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Sungei Bagan Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungei Bagan Rubber and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Sungei Bagan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungei Bagan Rubber has no effect on the direction of ES Ceramics i.e., ES Ceramics and Sungei Bagan go up and down completely randomly.
Pair Corralation between ES Ceramics and Sungei Bagan
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Sungei Bagan. In addition to that, ES Ceramics is 4.46 times more volatile than Sungei Bagan Rubber. It trades about -0.03 of its total potential returns per unit of risk. Sungei Bagan Rubber is currently generating about -0.08 per unit of volatility. If you would invest 594.00 in Sungei Bagan Rubber on September 2, 2024 and sell it today you would lose (28.00) from holding Sungei Bagan Rubber or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. Sungei Bagan Rubber
Performance |
| Timeline |
| ES Ceramics Technology |
| Sungei Bagan Rubber |
ES Ceramics and Sungei Bagan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and Sungei Bagan
The main advantage of trading using opposite ES Ceramics and Sungei Bagan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Sungei Bagan 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 Sungei Bagan will offset losses from the drop in Sungei Bagan's long position.| ES Ceramics vs. Magni Tech Industries | ES Ceramics vs. Digistar Bhd | ES Ceramics vs. Swift Haulage Bhd | ES Ceramics vs. Insas Bhd |
| Sungei Bagan vs. British American Tobacco | Sungei Bagan vs. FARM FRESH BERHAD | Sungei Bagan vs. Apollo Food 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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