Correlation Between Public Bank and Leader Steel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Public Bank and Leader Steel 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 Public Bank and Leader Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Bank Bhd and Leader Steel Holdings, you can compare the effects of market volatilities on Public Bank and Leader Steel 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 Public Bank with a short position of Leader Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and Leader Steel.

Diversification Opportunities for Public Bank and Leader Steel

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Public and Leader is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and Leader Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Steel Holdings and Public Bank 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 Public Bank Bhd are associated (or correlated) with Leader Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Steel Holdings has no effect on the direction of Public Bank i.e., Public Bank and Leader Steel go up and down completely randomly.

Pair Corralation between Public Bank and Leader Steel

Assuming the 90 days trading horizon Public Bank Bhd is expected to under-perform the Leader Steel. But the stock apears to be less risky and, when comparing its historical volatility, Public Bank Bhd is 2.32 times less risky than Leader Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Leader Steel Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Leader Steel Holdings on October 31, 2024 and sell it today you would lose (3.00) from holding Leader Steel Holdings or give up 6.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Public Bank Bhd  vs.  Leader Steel Holdings

 Performance 
       Timeline  
Public Bank Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Public Bank Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Public Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Leader Steel Holdings 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Leader Steel Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Leader Steel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Public Bank and Leader Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Public Bank and Leader Steel

The main advantage of trading using opposite Public Bank and Leader Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, Leader Steel 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 Leader Steel will offset losses from the drop in Leader Steel's long position.
The idea behind Public Bank Bhd and Leader Steel Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency