Correlation Between ES Ceramics and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Malaysia 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 ES Ceramics and Malaysia Steel 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 Malaysia Steel Works, you can compare the effects of market volatilities on ES Ceramics and Malaysia 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 ES Ceramics with a short position of Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Malaysia Steel.
Diversification Opportunities for ES Ceramics and Malaysia Steel
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0100 and Malaysia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works 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 Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of ES Ceramics i.e., ES Ceramics and Malaysia Steel go up and down completely randomly.
Pair Corralation between ES Ceramics and Malaysia Steel
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Malaysia Steel. In addition to that, ES Ceramics is 1.44 times more volatile than Malaysia Steel Works. It trades about -0.02 of its total potential returns per unit of risk. Malaysia Steel Works is currently generating about 0.0 per unit of volatility. If you would invest 33.00 in Malaysia Steel Works on September 3, 2024 and sell it today you would lose (2.00) from holding Malaysia Steel Works or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. Malaysia Steel Works
Performance |
| Timeline |
| ES Ceramics Technology |
| Malaysia Steel Works |
ES Ceramics and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and Malaysia Steel
The main advantage of trading using opposite ES Ceramics and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Malaysia 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.| ES Ceramics vs. Minetech Resources Bhd | ES Ceramics vs. Swift Haulage Bhd | ES Ceramics vs. Insas Bhd | ES Ceramics vs. Bina Darulaman Bhd |
| Malaysia Steel vs. Carlsberg Brewery Malaysia | Malaysia Steel vs. Sungei Bagan Rubber | Malaysia Steel vs. YX Precious Metals | Malaysia Steel vs. Mercury Industries Bhd |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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