Correlation Between Malayan Banking and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Hong Leong 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 Hong Leong 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 Hong Leong Bank, you can compare the effects of market volatilities on Malayan Banking and Hong Leong 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 Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Hong Leong.
Diversification Opportunities for Malayan Banking and Hong Leong
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malayan and Hong is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank 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 Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of Malayan Banking i.e., Malayan Banking and Hong Leong go up and down completely randomly.
Pair Corralation between Malayan Banking and Hong Leong
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.97 times more return on investment than Hong Leong. However, Malayan Banking Bhd is 1.03 times less risky than Hong Leong. It trades about 0.06 of its potential returns per unit of risk. Hong Leong Bank is currently generating about 0.02 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| Malayan Banking Bhd |
| Hong Leong Bank |
Malayan Banking and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Hong Leong
The main advantage of trading using opposite Malayan Banking and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong'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 |
| Hong Leong vs. Malayan Banking Bhd | Hong Leong vs. Public Bank Bhd | Hong Leong vs. RHB Bank Bhd | Hong Leong vs. Resintech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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