Correlation Between Sungei Bagan and YX Precious
Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and YX Precious 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 YX Precious 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 YX Precious Metals, you can compare the effects of market volatilities on Sungei Bagan and YX Precious 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 YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and YX Precious.
Diversification Opportunities for Sungei Bagan and YX Precious
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungei and 0250 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals 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 YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and YX Precious go up and down completely randomly.
Pair Corralation between Sungei Bagan and YX Precious
Assuming the 90 days trading horizon Sungei Bagan is expected to generate 1.23 times less return on investment than YX Precious. But when comparing it to its historical volatility, Sungei Bagan Rubber is 2.79 times less risky than YX Precious. It trades about 0.46 of its potential returns per unit of risk. YX Precious Metals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 23.00 in YX Precious Metals on November 21, 2024 and sell it today you would earn a total of 2.00 from holding YX Precious Metals or generate 8.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sungei Bagan Rubber vs. YX Precious Metals
Performance |
Timeline |
Sungei Bagan Rubber |
YX Precious Metals |
Sungei Bagan and YX Precious Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sungei Bagan and YX Precious
The main advantage of trading using opposite Sungei Bagan and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungei Bagan position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.Sungei Bagan vs. Awanbiru Technology Bhd | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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