Correlation Between Sungei Bagan and Computer Forms
Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and Computer Forms 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 Computer Forms 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 Computer Forms Bhd, you can compare the effects of market volatilities on Sungei Bagan and Computer Forms 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 Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and Computer Forms.
Diversification Opportunities for Sungei Bagan and Computer Forms
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sungei and Computer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and Computer Forms Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Forms 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 Computer Forms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Forms Bhd has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and Computer Forms go up and down completely randomly.
Pair Corralation between Sungei Bagan and Computer Forms
Assuming the 90 days trading horizon Sungei Bagan Rubber is expected to generate 0.39 times more return on investment than Computer Forms. However, Sungei Bagan Rubber is 2.54 times less risky than Computer Forms. It trades about 0.06 of its potential returns per unit of risk. Computer Forms Bhd is currently generating about -0.08 per unit of risk. If you would invest 341.00 in Sungei Bagan Rubber on September 3, 2024 and sell it today you would earn a total of 225.00 from holding Sungei Bagan Rubber or generate 65.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.74% |
| Values | Daily Returns |
Sungei Bagan Rubber vs. Computer Forms Bhd
Performance |
| Timeline |
| Sungei Bagan Rubber |
| Computer Forms Bhd |
Sungei Bagan and Computer Forms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sungei Bagan and Computer Forms
The main advantage of trading using opposite Sungei Bagan and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sungei Bagan position performs unexpectedly, Computer Forms 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 Computer Forms will offset losses from the drop in Computer Forms' long position.| Sungei Bagan vs. British American Tobacco | Sungei Bagan vs. FARM FRESH BERHAD | Sungei Bagan vs. Apollo Food Holdings | Sungei Bagan vs. Oriental Food Industries |
| Computer Forms vs. Tex Cycle Technology | Computer Forms vs. Minetech Resources Bhd | Computer Forms vs. Swift Haulage Bhd | Computer Forms vs. Insas 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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