Correlation Between SFP Tech and Meridian Bhd
Can any of the company-specific risk be diversified away by investing in both SFP Tech and Meridian Bhd 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 SFP Tech and Meridian Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFP Tech Holdings and Meridian Bhd, you can compare the effects of market volatilities on SFP Tech and Meridian Bhd 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 SFP Tech with a short position of Meridian Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Meridian Bhd.
Diversification Opportunities for SFP Tech and Meridian Bhd
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SFP and Meridian is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Meridian Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Bhd and SFP Tech 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 SFP Tech Holdings are associated (or correlated) with Meridian Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Bhd has no effect on the direction of SFP Tech i.e., SFP Tech and Meridian Bhd go up and down completely randomly.
Pair Corralation between SFP Tech and Meridian Bhd
Assuming the 90 days trading horizon SFP Tech is expected to generate 8.86 times less return on investment than Meridian Bhd. But when comparing it to its historical volatility, SFP Tech Holdings is 6.02 times less risky than Meridian Bhd. It trades about 0.05 of its potential returns per unit of risk. Meridian Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Meridian Bhd on September 4, 2024 and sell it today you would earn a total of 0.50 from holding Meridian Bhd or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFP Tech Holdings vs. Meridian Bhd
Performance |
| Timeline |
| SFP Tech Holdings |
| Meridian Bhd |
SFP Tech and Meridian Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFP Tech and Meridian Bhd
The main advantage of trading using opposite SFP Tech and Meridian Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech position performs unexpectedly, Meridian Bhd 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 Meridian Bhd will offset losses from the drop in Meridian Bhd's long position.| SFP Tech vs. Tex Cycle Technology | SFP Tech vs. Computer Forms Bhd | SFP Tech vs. Melewar Industrial Group | SFP Tech vs. PIE Industrial Bhd |
| Meridian Bhd vs. Ho Hup Construction | Meridian Bhd vs. Radiant Globaltech Bhd | Meridian Bhd vs. SFP Tech Holdings | Meridian Bhd vs. MI Technovation 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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