Correlation Between Melewar Industrial and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both Melewar Industrial 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 Melewar Industrial and Malayan Banking 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 Malayan Banking Bhd, you can compare the effects of market volatilities on Melewar Industrial 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 Melewar Industrial with a short position of Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melewar Industrial and Malayan Banking.
Diversification Opportunities for Melewar Industrial and Malayan Banking
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Melewar and Malayan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Melewar Industrial Group 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 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 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 Melewar Industrial i.e., Melewar Industrial and Malayan Banking go up and down completely randomly.
Pair Corralation between Melewar Industrial and Malayan Banking
Assuming the 90 days trading horizon Melewar Industrial Group is expected to under-perform the Malayan Banking. In addition to that, Melewar Industrial is 2.69 times more volatile than Malayan Banking Bhd. It trades about -0.09 of its total potential returns per unit of risk. Malayan Banking Bhd is currently generating about -0.12 per unit of volatility. If you would invest 1,040 in Malayan Banking Bhd on August 27, 2024 and sell it today you would lose (20.00) from holding Malayan Banking Bhd or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melewar Industrial Group vs. Malayan Banking Bhd
Performance |
| Timeline |
| Melewar Industrial |
| Malayan Banking Bhd |
Melewar Industrial and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melewar Industrial and Malayan Banking
The main advantage of trading using opposite Melewar Industrial and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melewar Industrial 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.| Melewar Industrial vs. Press Metal Bhd | Melewar Industrial vs. Southern Steel Bhd | Melewar Industrial vs. Eonmetall Group Bhd |
| Malayan Banking vs. Cengild Medical Berhad | Malayan Banking vs. YX Precious Metals | Malayan Banking vs. Melewar Industrial Group | Malayan Banking vs. Petronas Chemicals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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