Correlation Between Malayan Banking and Choo Bee
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Choo Bee 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 Choo Bee 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 Choo Bee Metal, you can compare the effects of market volatilities on Malayan Banking and Choo Bee 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 Choo Bee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Choo Bee.
Diversification Opportunities for Malayan Banking and Choo Bee
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Malayan and Choo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Choo Bee Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choo Bee Metal 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 Choo Bee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choo Bee Metal has no effect on the direction of Malayan Banking i.e., Malayan Banking and Choo Bee go up and down completely randomly.
Pair Corralation between Malayan Banking and Choo Bee
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.46 times more return on investment than Choo Bee. However, Malayan Banking Bhd is 2.16 times less risky than Choo Bee. It trades about 0.06 of its potential returns per unit of risk. Choo Bee Metal is currently generating about 0.01 per unit of risk. If you would invest 1,006 in Malayan Banking Bhd on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Malayan Banking Bhd or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Choo Bee Metal
Performance |
| Timeline |
| Malayan Banking Bhd |
| Choo Bee Metal |
Malayan Banking and Choo Bee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Choo Bee
The main advantage of trading using opposite Malayan Banking and Choo Bee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Choo Bee 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 Choo Bee will offset losses from the drop in Choo Bee's long position.| Malayan Banking vs. Public Bank Bhd | Malayan Banking vs. Eonmetall Group Bhd | Malayan Banking vs. Bank Islam Malaysia | Malayan Banking vs. Awanbiru Technology Bhd |
| Choo Bee vs. Greatech Technology Bhd | Choo Bee vs. Public Packages Holdings | Choo Bee vs. Cosmos Technology International | Choo Bee vs. Melewar Industrial Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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