Correlation Between Mycron Steel and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both Mycron Steel and Homeritz 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 Mycron Steel and Homeritz Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mycron Steel Bhd and Homeritz Bhd, you can compare the effects of market volatilities on Mycron Steel and Homeritz 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 Mycron Steel with a short position of Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mycron Steel and Homeritz Bhd.
Diversification Opportunities for Mycron Steel and Homeritz Bhd
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mycron and Homeritz is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mycron Steel Bhd and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd and Mycron Steel 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 Mycron Steel Bhd are associated (or correlated) with Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Mycron Steel i.e., Mycron Steel and Homeritz Bhd go up and down completely randomly.
Pair Corralation between Mycron Steel and Homeritz Bhd
Assuming the 90 days trading horizon Mycron Steel Bhd is expected to generate 2.73 times more return on investment than Homeritz Bhd. However, Mycron Steel is 2.73 times more volatile than Homeritz Bhd. It trades about 0.09 of its potential returns per unit of risk. Homeritz Bhd is currently generating about 0.01 per unit of risk. If you would invest 37.00 in Mycron Steel Bhd on August 26, 2024 and sell it today you would earn a total of 2.00 from holding Mycron Steel Bhd or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mycron Steel Bhd vs. Homeritz Bhd
Performance |
| Timeline |
| Mycron Steel Bhd |
| Homeritz Bhd |
Mycron Steel and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mycron Steel and Homeritz Bhd
The main advantage of trading using opposite Mycron Steel and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mycron Steel position performs unexpectedly, Homeritz 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.| Mycron Steel vs. Press Metal Bhd | Mycron Steel vs. Southern Steel Bhd | Mycron Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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