Correlation Between BP Plastics and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both BP Plastics 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 BP Plastics and Malayan Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Plastics Holding and Malayan Banking Bhd, you can compare the effects of market volatilities on BP Plastics 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 BP Plastics with a short position of Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and Malayan Banking.
Diversification Opportunities for BP Plastics and Malayan Banking
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 5100 and Malayan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding 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 BP Plastics 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 BP Plastics Holding 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 BP Plastics i.e., BP Plastics and Malayan Banking go up and down completely randomly.
Pair Corralation between BP Plastics and Malayan Banking
Assuming the 90 days trading horizon BP Plastics Holding is expected to under-perform the Malayan Banking. In addition to that, BP Plastics is 1.84 times more volatile than Malayan Banking Bhd. It trades about -0.05 of its total potential returns per unit of risk. Malayan Banking Bhd is currently generating about 0.05 per unit of volatility. If you would invest 979.00 in Malayan Banking Bhd on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Malayan Banking Bhd or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Plastics Holding vs. Malayan Banking Bhd
Performance |
| Timeline |
| BP Plastics Holding |
| Malayan Banking Bhd |
BP Plastics and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plastics and Malayan Banking
The main advantage of trading using opposite BP Plastics and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics 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.| BP Plastics vs. Press Metal Bhd | BP Plastics vs. Central Industrial Corp | BP Plastics vs. Cosmos Technology International | BP Plastics vs. Binasat Communications Bhd |
| Malayan Banking vs. Public Bank Bhd | Malayan Banking vs. Hong Leong Bank | Malayan Banking vs. RHB Bank 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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