Correlation Between Sungei Bagan and Sunzen Biotech
Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and Sunzen Biotech 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 Sungei Bagan and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sungei Bagan Rubber and Sunzen Biotech Bhd, you can compare the effects of market volatilities on Sungei Bagan and Sunzen Biotech 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 Sungei Bagan with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and Sunzen Biotech.
Diversification Opportunities for Sungei Bagan and Sunzen Biotech
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sungei and Sunzen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and Sungei Bagan 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 Sungei Bagan Rubber are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and Sunzen Biotech go up and down completely randomly.
Pair Corralation between Sungei Bagan and Sunzen Biotech
Assuming the 90 days trading horizon Sungei Bagan Rubber is expected to under-perform the Sunzen Biotech. In addition to that, Sungei Bagan is 1.21 times more volatile than Sunzen Biotech Bhd. It trades about -0.48 of its total potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about -0.21 per unit of volatility. If you would invest 33.00 in Sunzen Biotech Bhd on August 24, 2024 and sell it today you would lose (1.00) from holding Sunzen Biotech Bhd or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sungei Bagan Rubber vs. Sunzen Biotech Bhd
Performance |
| Timeline |
| Sungei Bagan Rubber |
| Sunzen Biotech Bhd |
Sungei Bagan and Sunzen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungei Bagan and Sunzen Biotech
The main advantage of trading using opposite Sungei Bagan and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungei Bagan position performs unexpectedly, Sunzen Biotech 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 Sunzen Biotech will offset losses from the drop in Sunzen Biotech's long position.| Sungei Bagan vs. Nestle Bhd | Sungei Bagan vs. FGV Holdings Bhd | Sungei Bagan vs. British American Tobacco | Sungei Bagan vs. FARM FRESH BERHAD |
| Sunzen Biotech vs. JF Technology BHD | Sunzen Biotech vs. EA Technique M | Sunzen Biotech vs. Oriental Food Industries | Sunzen Biotech vs. Coraza Integrated Technology |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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