Correlation Between Malayan Banking and Mesiniaga Bhd
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Mesiniaga 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 Malayan Banking and Mesiniaga Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and Mesiniaga Bhd, you can compare the effects of market volatilities on Malayan Banking and Mesiniaga 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 Malayan Banking with a short position of Mesiniaga Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Mesiniaga Bhd.
Diversification Opportunities for Malayan Banking and Mesiniaga Bhd
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Malayan and Mesiniaga is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Mesiniaga Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesiniaga Bhd and Malayan Banking 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 Malayan Banking Bhd are associated (or correlated) with Mesiniaga Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesiniaga Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and Mesiniaga Bhd go up and down completely randomly.
Pair Corralation between Malayan Banking and Mesiniaga Bhd
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to under-perform the Mesiniaga Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Malayan Banking Bhd is 2.55 times less risky than Mesiniaga Bhd. The stock trades about -0.09 of its potential returns per unit of risk. The Mesiniaga Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Mesiniaga Bhd on October 18, 2024 and sell it today you would earn a total of 7.00 from holding Mesiniaga Bhd or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Mesiniaga Bhd
Performance |
| Timeline |
| Malayan Banking Bhd |
| Mesiniaga Bhd |
Malayan Banking and Mesiniaga Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Mesiniaga Bhd
The main advantage of trading using opposite Malayan Banking and Mesiniaga Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Mesiniaga 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 Mesiniaga Bhd will offset losses from the drop in Mesiniaga Bhd's long position.| Malayan Banking vs. Magni Tech Industries | Malayan Banking vs. Oriental Food Industries | Malayan Banking vs. Cloudpoint Technology Berhad | Malayan Banking vs. Homeritz Bhd |
| Mesiniaga Bhd vs. Malayan Banking Bhd | Mesiniaga Bhd vs. Public Bank Bhd | Mesiniaga Bhd vs. Petronas Chemicals Group | Mesiniaga Bhd vs. Tenaga Nasional 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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