Correlation Between Malayan Banking and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and BP Plastics 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 BP Plastics 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 BP Plastics Holding, you can compare the effects of market volatilities on Malayan Banking and BP Plastics 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 BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and BP Plastics.
Diversification Opportunities for Malayan Banking and BP Plastics
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Malayan and 5100 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding 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 BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Malayan Banking i.e., Malayan Banking and BP Plastics go up and down completely randomly.
Pair Corralation between Malayan Banking and BP Plastics
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.54 times more return on investment than BP Plastics. However, Malayan Banking Bhd is 1.84 times less risky than BP Plastics. It trades about 0.05 of its potential returns per unit of risk. BP Plastics Holding is currently generating about -0.05 per unit of risk. If you would invest 979.00 in Malayan Banking Bhd on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Malayan Banking Bhd or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. BP Plastics Holding
Performance |
| Timeline |
| Malayan Banking Bhd |
| BP Plastics Holding |
Malayan Banking and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and BP Plastics
The main advantage of trading using opposite Malayan Banking and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.| Malayan Banking vs. Public Bank Bhd | Malayan Banking vs. Hong Leong Bank | Malayan Banking vs. RHB Bank Bhd |
| BP Plastics vs. Press Metal Bhd | BP Plastics vs. Central Industrial Corp | BP Plastics vs. Cosmos Technology International | BP Plastics vs. Binasat Communications 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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