Correlation Between Malayan Banking and Bank Islam
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Bank Islam 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 Bank Islam 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 Bank Islam Malaysia, you can compare the effects of market volatilities on Malayan Banking and Bank Islam 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 Bank Islam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Bank Islam.
Diversification Opportunities for Malayan Banking and Bank Islam
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malayan and Bank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Bank Islam Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Islam Malaysia 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 Bank Islam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Islam Malaysia has no effect on the direction of Malayan Banking i.e., Malayan Banking and Bank Islam go up and down completely randomly.
Pair Corralation between Malayan Banking and Bank Islam
Assuming the 90 days trading horizon Malayan Banking is expected to generate 1.39 times less return on investment than Bank Islam. But when comparing it to its historical volatility, Malayan Banking Bhd is 2.09 times less risky than Bank Islam. It trades about 0.11 of its potential returns per unit of risk. Bank Islam Malaysia is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Bank Islam Malaysia on October 30, 2024 and sell it today you would earn a total of 70.00 from holding Bank Islam Malaysia or generate 40.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Bank Islam Malaysia
Performance |
| Timeline |
| Malayan Banking Bhd |
| Bank Islam Malaysia |
Malayan Banking and Bank Islam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Bank Islam
The main advantage of trading using opposite Malayan Banking and Bank Islam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Bank Islam 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 Bank Islam will offset losses from the drop in Bank Islam's long position.| Malayan Banking vs. IHH Healthcare Bhd | Malayan Banking vs. Nova Wellness Group | Malayan Banking vs. Impiana Hotels Bhd | Malayan Banking vs. Apex Healthcare Bhd |
| Bank Islam vs. TAS Offshore Bhd | Bank Islam vs. K One Technology Bhd | Bank Islam vs. Pantech Group Holdings | Bank Islam vs. Mycron Steel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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