Correlation Between Batu Kawan and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Batu Kawan 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 Batu Kawan and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Batu Kawan Bhd and Hong Leong Bank, you can compare the effects of market volatilities on Batu Kawan 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 Batu Kawan with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batu Kawan and Hong Leong.
Diversification Opportunities for Batu Kawan and Hong Leong
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Batu and Hong is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Batu Kawan 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 Batu Kawan 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 Batu Kawan 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 Batu Kawan i.e., Batu Kawan and Hong Leong go up and down completely randomly.
Pair Corralation between Batu Kawan and Hong Leong
Assuming the 90 days trading horizon Batu Kawan Bhd is expected to generate 0.58 times more return on investment than Hong Leong. However, Batu Kawan Bhd is 1.71 times less risky than Hong Leong. It trades about 0.03 of its potential returns per unit of risk. Hong Leong Bank is currently generating about -0.08 per unit of risk. If you would invest 2,000 in Batu Kawan Bhd on October 20, 2024 and sell it today you would earn a total of 10.00 from holding Batu Kawan Bhd or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Batu Kawan Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| Batu Kawan Bhd |
| Hong Leong Bank |
Batu Kawan and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Batu Kawan and Hong Leong
The main advantage of trading using opposite Batu Kawan and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Batu Kawan 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.| Batu Kawan vs. Cloudpoint Technology Berhad | Batu Kawan vs. Hong Leong Bank | Batu Kawan vs. Carlsberg Brewery Malaysia | Batu Kawan vs. Petronas Chemicals Group |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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