Correlation Between Malayan Banking and Lotus KFM
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Lotus KFM 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 Lotus KFM 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 Lotus KFM Bhd, you can compare the effects of market volatilities on Malayan Banking and Lotus KFM 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 Lotus KFM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Lotus KFM.
Diversification Opportunities for Malayan Banking and Lotus KFM
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Malayan and Lotus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Lotus KFM Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus KFM 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 Lotus KFM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus KFM Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and Lotus KFM go up and down completely randomly.
Pair Corralation between Malayan Banking and Lotus KFM
Assuming the 90 days trading horizon Malayan Banking is expected to generate 2.11 times less return on investment than Lotus KFM. But when comparing it to its historical volatility, Malayan Banking Bhd is 7.67 times less risky than Lotus KFM. It trades about 0.1 of its potential returns per unit of risk. Lotus KFM Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Lotus KFM Bhd on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Lotus KFM Bhd or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Lotus KFM Bhd
Performance |
| Timeline |
| Malayan Banking Bhd |
| Lotus KFM Bhd |
Malayan Banking and Lotus KFM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Lotus KFM
The main advantage of trading using opposite Malayan Banking and Lotus KFM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Lotus KFM 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 Lotus KFM will offset losses from the drop in Lotus KFM's long position.| Malayan Banking vs. Southern Steel Bhd | Malayan Banking vs. Greatech Technology Bhd | Malayan Banking vs. Mycron Steel Bhd | Malayan Banking vs. Sunzen Biotech Bhd |
| Lotus KFM vs. Silver Ridge Holdings | Lotus KFM vs. Minetech Resources Bhd | Lotus KFM vs. CSC Steel Holdings | Lotus KFM vs. Rubberex M |
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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