Correlation Between MClean Technologies and Hong Leong
Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Hong Leong 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 MClean Technologies and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MClean Technologies Bhd and Hong Leong Bank, you can compare the effects of market volatilities on MClean Technologies and Hong Leong 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 MClean Technologies with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and Hong Leong.
Diversification Opportunities for MClean Technologies and Hong Leong
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MClean and Hong is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of MClean Technologies i.e., MClean Technologies and Hong Leong go up and down completely randomly.
Pair Corralation between MClean Technologies and Hong Leong
Assuming the 90 days trading horizon MClean Technologies is expected to generate 2.38 times less return on investment than Hong Leong. In addition to that, MClean Technologies is 4.98 times more volatile than Hong Leong Bank. It trades about 0.01 of its total potential returns per unit of risk. Hong Leong Bank is currently generating about 0.16 per unit of volatility. If you would invest 2,036 in Hong Leong Bank on November 28, 2024 and sell it today you would earn a total of 34.00 from holding Hong Leong Bank or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MClean Technologies Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| MClean Technologies Bhd |
| Hong Leong Bank |
MClean Technologies and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MClean Technologies and Hong Leong
The main advantage of trading using opposite MClean Technologies and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MClean Technologies position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| MClean Technologies vs. Sunway Construction Group | MClean Technologies vs. DC HEALTHCARE HOLDINGS | MClean Technologies vs. Sports Toto Berhad | MClean Technologies vs. TAS Offshore Bhd |
| Hong Leong vs. Choo Bee Metal | Hong Leong vs. Lyc Healthcare Bhd | Hong Leong vs. Press Metal Bhd | Hong Leong vs. Central Industrial Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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