Correlation Between Eversafe Rubber and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Eversafe Rubber 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 Eversafe Rubber and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eversafe Rubber Bhd and Hong Leong Bank, you can compare the effects of market volatilities on Eversafe Rubber 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 Eversafe Rubber with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversafe Rubber and Hong Leong.
Diversification Opportunities for Eversafe Rubber and Hong Leong
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eversafe and Hong is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eversafe Rubber 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 Eversafe Rubber 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 Eversafe Rubber 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 Eversafe Rubber i.e., Eversafe Rubber and Hong Leong go up and down completely randomly.
Pair Corralation between Eversafe Rubber and Hong Leong
Assuming the 90 days trading horizon Eversafe Rubber Bhd is expected to generate 5.56 times more return on investment than Hong Leong. However, Eversafe Rubber is 5.56 times more volatile than Hong Leong Bank. It trades about 0.01 of its potential returns per unit of risk. Hong Leong Bank is currently generating about 0.02 per unit of risk. If you would invest 19.00 in Eversafe Rubber Bhd on September 14, 2024 and sell it today you would lose (3.00) from holding Eversafe Rubber Bhd or give up 15.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eversafe Rubber Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| Eversafe Rubber Bhd |
| Hong Leong Bank |
Eversafe Rubber and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversafe Rubber and Hong Leong
The main advantage of trading using opposite Eversafe Rubber and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversafe Rubber 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.| Eversafe Rubber vs. Sapura Industrial Bhd | Eversafe Rubber vs. Al Aqar Healthcare | Eversafe Rubber vs. PMB Technology Bhd | Eversafe Rubber vs. Digistar Bhd |
| Hong Leong vs. Kawan Food Bhd | Hong Leong vs. FARM FRESH BERHAD | Hong Leong vs. Eversafe Rubber Bhd | Hong Leong vs. K One Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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