Correlation Between Melewar Industrial and Tomei Consolidated
Can any of the company-specific risk be diversified away by investing in both Melewar Industrial and Tomei Consolidated 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 Tomei Consolidated 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 Tomei Consolidated Bhd, you can compare the effects of market volatilities on Melewar Industrial and Tomei Consolidated 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 Tomei Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melewar Industrial and Tomei Consolidated.
Diversification Opportunities for Melewar Industrial and Tomei Consolidated
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melewar and Tomei is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Melewar Industrial Group and Tomei Consolidated Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomei Consolidated 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 Tomei Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomei Consolidated Bhd has no effect on the direction of Melewar Industrial i.e., Melewar Industrial and Tomei Consolidated go up and down completely randomly.
Pair Corralation between Melewar Industrial and Tomei Consolidated
Assuming the 90 days trading horizon Melewar Industrial Group is expected to generate 1.45 times more return on investment than Tomei Consolidated. However, Melewar Industrial is 1.45 times more volatile than Tomei Consolidated Bhd. It trades about -0.03 of its potential returns per unit of risk. Tomei Consolidated Bhd is currently generating about -0.07 per unit of risk. If you would invest 27.00 in Melewar Industrial Group on September 3, 2024 and sell it today you would lose (5.00) from holding Melewar Industrial Group or give up 18.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melewar Industrial Group vs. Tomei Consolidated Bhd
Performance |
| Timeline |
| Melewar Industrial |
| Tomei Consolidated Bhd |
Melewar Industrial and Tomei Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melewar Industrial and Tomei Consolidated
The main advantage of trading using opposite Melewar Industrial and Tomei Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melewar Industrial position performs unexpectedly, Tomei Consolidated 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 Tomei Consolidated will offset losses from the drop in Tomei Consolidated's long position.| Melewar Industrial vs. Press Metal Bhd | Melewar Industrial vs. Malaysia Steel Works | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Eonmetall Group Bhd |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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