Correlation Between Sungei Bagan and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and Malayan Banking 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 Malayan Banking 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 Malayan Banking Bhd, you can compare the effects of market volatilities on Sungei Bagan and Malayan Banking 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 Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and Malayan Banking.
Diversification Opportunities for Sungei Bagan and Malayan Banking
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sungei and Malayan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and Malayan Banking Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malayan Banking 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 Malayan Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malayan Banking Bhd has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and Malayan Banking go up and down completely randomly.
Pair Corralation between Sungei Bagan and Malayan Banking
Assuming the 90 days trading horizon Sungei Bagan Rubber is expected to under-perform the Malayan Banking. But the stock apears to be less risky and, when comparing its historical volatility, Sungei Bagan Rubber is 1.21 times less risky than Malayan Banking. The stock trades about -0.62 of its potential returns per unit of risk. The Malayan Banking Bhd is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Malayan Banking Bhd on August 30, 2024 and sell it today you would lose (28.00) from holding Malayan Banking Bhd or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sungei Bagan Rubber vs. Malayan Banking Bhd
Performance |
| Timeline |
| Sungei Bagan Rubber |
| Malayan Banking Bhd |
Sungei Bagan and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungei Bagan and Malayan Banking
The main advantage of trading using opposite Sungei Bagan and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungei Bagan position performs unexpectedly, Malayan Banking 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 Malayan Banking will offset losses from the drop in Malayan Banking's long position.| Sungei Bagan vs. Pantech Group Holdings | Sungei Bagan vs. Malayan Banking Bhd | Sungei Bagan vs. Datasonic Group Bhd | Sungei Bagan vs. Press Metal Bhd |
| Malayan Banking vs. PIE Industrial Bhd | Malayan Banking vs. Press Metal Bhd | Malayan Banking vs. Binasat Communications Bhd | Malayan Banking vs. Choo Bee Metal |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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