Correlation Between Malpac Holdings and IOI Bhd
Can any of the company-specific risk be diversified away by investing in both Malpac Holdings and IOI Bhd 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 Malpac Holdings and IOI Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malpac Holdings Bhd and IOI Bhd, you can compare the effects of market volatilities on Malpac Holdings and IOI Bhd 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 Malpac Holdings with a short position of IOI Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malpac Holdings and IOI Bhd.
Diversification Opportunities for Malpac Holdings and IOI Bhd
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Malpac and IOI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Malpac Holdings Bhd and IOI Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOI Bhd and Malpac Holdings 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 Malpac Holdings Bhd are associated (or correlated) with IOI Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOI Bhd has no effect on the direction of Malpac Holdings i.e., Malpac Holdings and IOI Bhd go up and down completely randomly.
Pair Corralation between Malpac Holdings and IOI Bhd
Assuming the 90 days trading horizon Malpac Holdings Bhd is expected to generate 5.75 times more return on investment than IOI Bhd. However, Malpac Holdings is 5.75 times more volatile than IOI Bhd. It trades about 0.02 of its potential returns per unit of risk. IOI Bhd is currently generating about -0.01 per unit of risk. If you would invest 100.00 in Malpac Holdings Bhd on November 3, 2024 and sell it today you would lose (16.00) from holding Malpac Holdings Bhd or give up 16.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malpac Holdings Bhd vs. IOI Bhd
Performance |
| Timeline |
| Malpac Holdings Bhd |
| IOI Bhd |
Malpac Holdings and IOI Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malpac Holdings and IOI Bhd
The main advantage of trading using opposite Malpac Holdings and IOI Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malpac Holdings position performs unexpectedly, IOI Bhd 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 IOI Bhd will offset losses from the drop in IOI Bhd's long position.| Malpac Holdings vs. Ho Hup Construction | Malpac Holdings vs. CB Industrial Product | Malpac Holdings vs. Central Industrial Corp | Malpac Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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