Correlation Between Melewar Industrial and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both Melewar Industrial and Binasat Communications 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 Binasat Communications 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 Binasat Communications Bhd, you can compare the effects of market volatilities on Melewar Industrial and Binasat Communications 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 Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melewar Industrial and Binasat Communications.
Diversification Opportunities for Melewar Industrial and Binasat Communications
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melewar and Binasat is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Melewar Industrial Group and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications 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 Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Melewar Industrial i.e., Melewar Industrial and Binasat Communications go up and down completely randomly.
Pair Corralation between Melewar Industrial and Binasat Communications
Assuming the 90 days trading horizon Melewar Industrial Group is expected to generate 0.97 times more return on investment than Binasat Communications. However, Melewar Industrial Group is 1.03 times less risky than Binasat Communications. It trades about 0.0 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.01 per unit of risk. If you would invest 25.00 in Melewar Industrial Group on August 31, 2024 and sell it today you would lose (3.00) from holding Melewar Industrial Group or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melewar Industrial Group vs. Binasat Communications Bhd
Performance |
| Timeline |
| Melewar Industrial |
| Binasat Communications |
Melewar Industrial and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melewar Industrial and Binasat Communications
The main advantage of trading using opposite Melewar Industrial and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melewar Industrial position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.| Melewar Industrial vs. Pantech Group Holdings | Melewar Industrial vs. Coraza Integrated Technology | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Eonmetall Group Bhd |
| Binasat Communications vs. Digistar Bhd | Binasat Communications vs. Minetech Resources Bhd | Binasat Communications vs. Swift Haulage Bhd | Binasat Communications vs. Bina Darulaman 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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