Correlation Between Melewar Industrial and Daya Materials
Can any of the company-specific risk be diversified away by investing in both Melewar Industrial and Daya Materials 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 Melewar Industrial and Daya Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melewar Industrial Group and Daya Materials Bhd, you can compare the effects of market volatilities on Melewar Industrial and Daya Materials 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 Melewar Industrial with a short position of Daya Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melewar Industrial and Daya Materials.
Diversification Opportunities for Melewar Industrial and Daya Materials
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Melewar and Daya is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Melewar Industrial Group and Daya Materials Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daya Materials Bhd and Melewar Industrial 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 Melewar Industrial Group are associated (or correlated) with Daya Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daya Materials Bhd has no effect on the direction of Melewar Industrial i.e., Melewar Industrial and Daya Materials go up and down completely randomly.
Pair Corralation between Melewar Industrial and Daya Materials
Assuming the 90 days trading horizon Melewar Industrial Group is expected to generate 1.09 times more return on investment than Daya Materials. However, Melewar Industrial is 1.09 times more volatile than Daya Materials Bhd. It trades about 0.09 of its potential returns per unit of risk. Daya Materials Bhd is currently generating about 0.01 per unit of risk. If you would invest 21.00 in Melewar Industrial Group on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Melewar Industrial Group or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melewar Industrial Group vs. Daya Materials Bhd
Performance |
| Timeline |
| Melewar Industrial |
| Daya Materials Bhd |
Melewar Industrial and Daya Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melewar Industrial and Daya Materials
The main advantage of trading using opposite Melewar Industrial and Daya Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melewar Industrial position performs unexpectedly, Daya Materials 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 Daya Materials will offset losses from the drop in Daya Materials' long position.| Melewar Industrial vs. YX Precious Metals | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Riverview Rubber Estates | Melewar Industrial vs. Kossan Rubber Industries |
| Daya Materials vs. Carlsberg Brewery Malaysia | Daya Materials vs. CPE Technology Berhad | Daya Materials vs. Central Industrial Corp | Daya Materials vs. Melewar Industrial Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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