Correlation Between HeiTech Padu and Senheng New
Can any of the company-specific risk be diversified away by investing in both HeiTech Padu and Senheng New 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 HeiTech Padu and Senheng New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeiTech Padu Bhd and Senheng New Retail, you can compare the effects of market volatilities on HeiTech Padu and Senheng New 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 HeiTech Padu with a short position of Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeiTech Padu and Senheng New.
Diversification Opportunities for HeiTech Padu and Senheng New
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HeiTech and Senheng is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding HeiTech Padu Bhd and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail and HeiTech Padu 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 HeiTech Padu Bhd are associated (or correlated) with Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of HeiTech Padu i.e., HeiTech Padu and Senheng New go up and down completely randomly.
Pair Corralation between HeiTech Padu and Senheng New
Assuming the 90 days trading horizon HeiTech Padu Bhd is expected to generate 2.18 times more return on investment than Senheng New. However, HeiTech Padu is 2.18 times more volatile than Senheng New Retail. It trades about 0.08 of its potential returns per unit of risk. Senheng New Retail is currently generating about -0.07 per unit of risk. If you would invest 79.00 in HeiTech Padu Bhd on August 26, 2024 and sell it today you would earn a total of 268.00 from holding HeiTech Padu Bhd or generate 339.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HeiTech Padu Bhd vs. Senheng New Retail
Performance |
| Timeline |
| HeiTech Padu Bhd |
| Senheng New Retail |
HeiTech Padu and Senheng New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeiTech Padu and Senheng New
The main advantage of trading using opposite HeiTech Padu and Senheng New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeiTech Padu position performs unexpectedly, Senheng New 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 Senheng New will offset losses from the drop in Senheng New's long position.The idea behind HeiTech Padu Bhd and Senheng New Retail pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Valuation module to check real value of public entities based on technical and fundamental data.
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