Correlation Between Media Prima and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Media Prima and BP Plastics 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 Media Prima and BP Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media Prima Bhd and BP Plastics Holding, you can compare the effects of market volatilities on Media Prima and BP Plastics 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 Media Prima with a short position of BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media Prima and BP Plastics.
Diversification Opportunities for Media Prima and BP Plastics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Media and 5100 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Media Prima Bhd and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding and Media Prima 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 Media Prima Bhd are associated (or correlated) with BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Media Prima i.e., Media Prima and BP Plastics go up and down completely randomly.
Pair Corralation between Media Prima and BP Plastics
Assuming the 90 days trading horizon Media Prima Bhd is expected to generate 1.35 times more return on investment than BP Plastics. However, Media Prima is 1.35 times more volatile than BP Plastics Holding. It trades about 0.02 of its potential returns per unit of risk. BP Plastics Holding is currently generating about 0.01 per unit of risk. If you would invest 41.00 in Media Prima Bhd on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Media Prima Bhd or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media Prima Bhd vs. BP Plastics Holding
Performance |
| Timeline |
| Media Prima Bhd |
| BP Plastics Holding |
Media Prima and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media Prima and BP Plastics
The main advantage of trading using opposite Media Prima and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media Prima position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.| Media Prima vs. Magni Tech Industries | Media Prima vs. ONETECH SOLUTIONS HOLDINGS | Media Prima vs. Resintech Bhd | Media Prima vs. Mycron Steel Bhd |
| BP Plastics vs. Aurelius Technologies Bhd | BP Plastics vs. FARM FRESH BERHAD | BP Plastics vs. Nova Wellness Group | BP Plastics vs. Magni Tech Industries |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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