Correlation Between Malayan Banking and Aeon Credit
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Aeon Credit 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 Aeon Credit 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 Aeon Credit Service, you can compare the effects of market volatilities on Malayan Banking and Aeon Credit 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 Aeon Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Aeon Credit.
Diversification Opportunities for Malayan Banking and Aeon Credit
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Malayan and Aeon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Aeon Credit Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Credit Service 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 Aeon Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Credit Service has no effect on the direction of Malayan Banking i.e., Malayan Banking and Aeon Credit go up and down completely randomly.
Pair Corralation between Malayan Banking and Aeon Credit
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to under-perform the Aeon Credit. But the stock apears to be less risky and, when comparing its historical volatility, Malayan Banking Bhd is 1.05 times less risky than Aeon Credit. The stock trades about -0.22 of its potential returns per unit of risk. The Aeon Credit Service is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 707.00 in Aeon Credit Service on August 24, 2024 and sell it today you would lose (22.00) from holding Aeon Credit Service or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Aeon Credit Service
Performance |
| Timeline |
| Malayan Banking Bhd |
| Aeon Credit Service |
Malayan Banking and Aeon Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Aeon Credit
The main advantage of trading using opposite Malayan Banking and Aeon Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Aeon Credit 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 Aeon Credit will offset losses from the drop in Aeon Credit's long position.The idea behind Malayan Banking Bhd and Aeon Credit Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aeon Credit vs. Oriental Food Industries | Aeon Credit vs. Hong Leong Bank | Aeon Credit vs. Alliance Financial Group | Aeon Credit vs. Kawan Food 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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