Correlation Between SFP Tech and Resintech Bhd
Can any of the company-specific risk be diversified away by investing in both SFP Tech and Resintech 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 Resintech 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 Resintech Bhd, you can compare the effects of market volatilities on SFP Tech and Resintech 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 Resintech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Resintech Bhd.
Diversification Opportunities for SFP Tech and Resintech Bhd
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SFP and Resintech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and Resintech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resintech 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 Resintech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resintech Bhd has no effect on the direction of SFP Tech i.e., SFP Tech and Resintech Bhd go up and down completely randomly.
Pair Corralation between SFP Tech and Resintech Bhd
Assuming the 90 days trading horizon SFP Tech is expected to generate 1.87 times less return on investment than Resintech Bhd. But when comparing it to its historical volatility, SFP Tech Holdings is 1.08 times less risky than Resintech Bhd. It trades about 0.05 of its potential returns per unit of risk. Resintech Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Resintech Bhd on October 25, 2024 and sell it today you would earn a total of 4.00 from holding Resintech Bhd or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFP Tech Holdings vs. Resintech Bhd
Performance |
| Timeline |
| SFP Tech Holdings |
| Resintech Bhd |
SFP Tech and Resintech Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFP Tech and Resintech Bhd
The main advantage of trading using opposite SFP Tech and Resintech Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech position performs unexpectedly, Resintech 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 Resintech Bhd will offset losses from the drop in Resintech Bhd's long position.| SFP Tech vs. Lysaght Galvanized Steel | SFP Tech vs. Malaysia Steel Works | SFP Tech vs. Mercury Industries Bhd | SFP Tech vs. Apex Healthcare Bhd |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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