Correlation Between Malayan Banking and Hil Industries
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Hil Industries 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 Hil Industries 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 Hil Industries Bhd, you can compare the effects of market volatilities on Malayan Banking and Hil Industries 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 Hil Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Hil Industries.
Diversification Opportunities for Malayan Banking and Hil Industries
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Malayan and Hil is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Hil Industries Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hil Industries 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 Hil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hil Industries Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and Hil Industries go up and down completely randomly.
Pair Corralation between Malayan Banking and Hil Industries
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to under-perform the Hil Industries. But the stock apears to be less risky and, when comparing its historical volatility, Malayan Banking Bhd is 1.21 times less risky than Hil Industries. The stock trades about -0.15 of its potential returns per unit of risk. The Hil Industries Bhd is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Hil Industries Bhd on August 30, 2024 and sell it today you would lose (2.00) from holding Hil Industries Bhd or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Hil Industries Bhd
Performance |
| Timeline |
| Malayan Banking Bhd |
| Hil Industries Bhd |
Malayan Banking and Hil Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Hil Industries
The main advantage of trading using opposite Malayan Banking and Hil Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Hil Industries 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 Hil Industries will offset losses from the drop in Hil Industries' long position.| Malayan Banking vs. PIE Industrial Bhd | Malayan Banking vs. Press Metal Bhd | Malayan Banking vs. Binasat Communications Bhd | Malayan Banking vs. Choo Bee Metal |
| Hil Industries vs. Malayan Banking Bhd | Hil Industries vs. Public Bank Bhd | Hil Industries vs. Petronas Chemicals Group | Hil Industries vs. IHH Healthcare 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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