Correlation Between PPB Group and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both PPB Group 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 PPB Group and Binasat Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPB Group Bhd and Binasat Communications Bhd, you can compare the effects of market volatilities on PPB Group 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 PPB Group with a short position of Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPB Group and Binasat Communications.
Diversification Opportunities for PPB Group and Binasat Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPB and Binasat is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group Bhd and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and PPB Group 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 PPB Group Bhd 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 PPB Group i.e., PPB Group and Binasat Communications go up and down completely randomly.
Pair Corralation between PPB Group and Binasat Communications
Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the Binasat Communications. But the stock apears to be less risky and, when comparing its historical volatility, PPB Group Bhd is 2.6 times less risky than Binasat Communications. The stock trades about -0.06 of its potential returns per unit of risk. The Binasat Communications Bhd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Binasat Communications Bhd on November 28, 2024 and sell it today you would lose (10.00) from holding Binasat Communications Bhd or give up 37.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPB Group Bhd vs. Binasat Communications Bhd
Performance |
| Timeline |
| PPB Group Bhd |
| Binasat Communications |
PPB Group and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPB Group and Binasat Communications
The main advantage of trading using opposite PPB Group and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group 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.| PPB Group vs. Press Metal Bhd | PPB Group vs. Uchi Technologies Bhd | PPB Group vs. Star Media Group | PPB Group vs. Binasat Communications Bhd |
| Binasat Communications vs. Malayan Banking Bhd | Binasat Communications vs. Oriental Food Industries | Binasat Communications vs. ECM Libra Financial | Binasat Communications vs. Apollo Food Holdings |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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