Correlation Between Meridian Bhd and PMB Technology
Can any of the company-specific risk be diversified away by investing in both Meridian Bhd and PMB Technology 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 Meridian Bhd and PMB Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Bhd and PMB Technology Bhd, you can compare the effects of market volatilities on Meridian Bhd and PMB Technology 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 Meridian Bhd with a short position of PMB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Bhd and PMB Technology.
Diversification Opportunities for Meridian Bhd and PMB Technology
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meridian and PMB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Bhd and PMB Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMB Technology Bhd and Meridian Bhd 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 Meridian Bhd are associated (or correlated) with PMB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMB Technology Bhd has no effect on the direction of Meridian Bhd i.e., Meridian Bhd and PMB Technology go up and down completely randomly.
Pair Corralation between Meridian Bhd and PMB Technology
Assuming the 90 days trading horizon Meridian Bhd is expected to generate 2.13 times more return on investment than PMB Technology. However, Meridian Bhd is 2.13 times more volatile than PMB Technology Bhd. It trades about 0.04 of its potential returns per unit of risk. PMB Technology Bhd is currently generating about -0.01 per unit of risk. If you would invest 5.50 in Meridian Bhd on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Meridian Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Bhd vs. PMB Technology Bhd
Performance |
| Timeline |
| Meridian Bhd |
| PMB Technology Bhd |
Meridian Bhd and PMB Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Bhd and PMB Technology
The main advantage of trading using opposite Meridian Bhd and PMB Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Bhd position performs unexpectedly, PMB Technology 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 PMB Technology will offset losses from the drop in PMB Technology's long position.| Meridian Bhd vs. Ho Hup Construction | Meridian Bhd vs. Radiant Globaltech Bhd | Meridian Bhd vs. SFP Tech Holdings | Meridian Bhd vs. MI Technovation Bhd |
| PMB Technology vs. Press Metal Bhd | PMB Technology vs. Malaysia Steel Works | PMB Technology vs. Choo Bee Metal | PMB Technology vs. Eonmetall Group Bhd |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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