Correlation Between CSC Steel and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both CSC Steel and Malayan Banking 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 CSC Steel and Malayan Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSC Steel Holdings and Malayan Banking Bhd, you can compare the effects of market volatilities on CSC Steel and Malayan Banking 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 CSC Steel with a short position of Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSC Steel and Malayan Banking.
Diversification Opportunities for CSC Steel and Malayan Banking
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between CSC and Malayan is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Malayan Banking Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malayan Banking Bhd and CSC 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 CSC Steel Holdings are associated (or correlated) with Malayan Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malayan Banking Bhd has no effect on the direction of CSC Steel i.e., CSC Steel and Malayan Banking go up and down completely randomly.
Pair Corralation between CSC Steel and Malayan Banking
Assuming the 90 days trading horizon CSC Steel Holdings is expected to generate 1.31 times more return on investment than Malayan Banking. However, CSC Steel is 1.31 times more volatile than Malayan Banking Bhd. It trades about 0.01 of its potential returns per unit of risk. Malayan Banking Bhd is currently generating about -0.18 per unit of risk. If you would invest 119.00 in CSC Steel Holdings on August 26, 2024 and sell it today you would earn a total of 0.00 from holding CSC Steel Holdings 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 |
CSC Steel Holdings vs. Malayan Banking Bhd
Performance |
| Timeline |
| CSC Steel Holdings |
| Malayan Banking Bhd |
CSC Steel and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSC Steel and Malayan Banking
The main advantage of trading using opposite CSC Steel and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSC Steel position performs unexpectedly, Malayan Banking 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 Malayan Banking will offset losses from the drop in Malayan Banking's long position.The idea behind CSC Steel Holdings and Malayan Banking Bhd 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.| Malayan Banking vs. Homeritz Bhd | Malayan Banking vs. Sungei Bagan Rubber | Malayan Banking vs. MClean Technologies Bhd | Malayan Banking vs. Rubberex M |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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