Correlation Between Malaysia Steel and Top Glove
Can any of the company-specific risk be diversified away by investing in both Malaysia Steel and Top Glove 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 Malaysia Steel and Top Glove into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malaysia Steel Works and Top Glove, you can compare the effects of market volatilities on Malaysia Steel and Top Glove 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 Malaysia Steel with a short position of Top Glove. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaysia Steel and Top Glove.
Diversification Opportunities for Malaysia Steel and Top Glove
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malaysia and Top is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Malaysia Steel Works and Top Glove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Glove and Malaysia 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 Malaysia Steel Works are associated (or correlated) with Top Glove. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Glove has no effect on the direction of Malaysia Steel i.e., Malaysia Steel and Top Glove go up and down completely randomly.
Pair Corralation between Malaysia Steel and Top Glove
Assuming the 90 days trading horizon Malaysia Steel is expected to generate 2.47 times less return on investment than Top Glove. But when comparing it to its historical volatility, Malaysia Steel Works is 1.15 times less risky than Top Glove. It trades about 0.09 of its potential returns per unit of risk. Top Glove is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Top Glove on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Top Glove or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malaysia Steel Works vs. Top Glove
Performance |
| Timeline |
| Malaysia Steel Works |
| Top Glove |
Malaysia Steel and Top Glove Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malaysia Steel and Top Glove
The main advantage of trading using opposite Malaysia Steel and Top Glove positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaysia Steel position performs unexpectedly, Top Glove 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 Top Glove will offset losses from the drop in Top Glove's long position.| Malaysia Steel vs. Carlsberg Brewery Malaysia | Malaysia Steel vs. Sungei Bagan Rubber | Malaysia Steel vs. YX Precious Metals | Malaysia Steel vs. Mercury Industries Bhd |
| Top Glove vs. Malaysia Steel Works | Top Glove vs. Media Prima Bhd | Top Glove vs. Leader Steel Holdings | Top Glove vs. Hong Leong Bank |
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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