Correlation Between Malayan Banking and Sapura Industrial
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Sapura Industrial 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 Sapura Industrial 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 Sapura Industrial Bhd, you can compare the effects of market volatilities on Malayan Banking and Sapura Industrial 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 Sapura Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Sapura Industrial.
Diversification Opportunities for Malayan Banking and Sapura Industrial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Malayan and Sapura is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial Bhd 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and Sapura Industrial go up and down completely randomly.
Pair Corralation between Malayan Banking and Sapura Industrial
Assuming the 90 days trading horizon Malayan Banking is expected to generate 1.01 times less return on investment than Sapura Industrial. But when comparing it to its historical volatility, Malayan Banking Bhd is 3.65 times less risky than Sapura Industrial. It trades about 0.14 of its potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Sapura Industrial Bhd on October 29, 2024 and sell it today you would earn a total of 1.00 from holding Sapura Industrial Bhd or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Sapura Industrial Bhd
Performance |
| Timeline |
| Malayan Banking Bhd |
| Sapura Industrial Bhd |
Malayan Banking and Sapura Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Sapura Industrial
The main advantage of trading using opposite Malayan Banking and Sapura Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Sapura Industrial 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 Sapura Industrial will offset losses from the drop in Sapura Industrial's long position.| Malayan Banking vs. Steel Hawk Berhad | Malayan Banking vs. YX Precious Metals | Malayan Banking vs. DC HEALTHCARE HOLDINGS | Malayan Banking vs. Al Aqar Healthcare |
| Sapura Industrial vs. Eversafe Rubber Bhd | Sapura Industrial vs. Minetech Resources Bhd | Sapura Industrial vs. AirAsia X Bhd | Sapura Industrial vs. Tambun Indah Land |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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