Correlation Between Hartalega Holdings and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Hartalega Holdings and BP Plastics 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 Hartalega Holdings and BP Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartalega Holdings Bhd and BP Plastics Holding, you can compare the effects of market volatilities on Hartalega Holdings and BP Plastics 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 Hartalega Holdings with a short position of BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartalega Holdings and BP Plastics.
Diversification Opportunities for Hartalega Holdings and BP Plastics
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hartalega and 5100 is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hartalega Holdings Bhd and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding and Hartalega Holdings 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 Hartalega Holdings Bhd are associated (or correlated) with BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Hartalega Holdings i.e., Hartalega Holdings and BP Plastics go up and down completely randomly.
Pair Corralation between Hartalega Holdings and BP Plastics
Assuming the 90 days trading horizon Hartalega Holdings Bhd is expected to generate 1.36 times more return on investment than BP Plastics. However, Hartalega Holdings is 1.36 times more volatile than BP Plastics Holding. It trades about 0.56 of its potential returns per unit of risk. BP Plastics Holding is currently generating about -0.06 per unit of risk. If you would invest 320.00 in Hartalega Holdings Bhd on September 12, 2024 and sell it today you would earn a total of 71.00 from holding Hartalega Holdings Bhd or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hartalega Holdings Bhd vs. BP Plastics Holding
Performance |
| Timeline |
| Hartalega Holdings Bhd |
| BP Plastics Holding |
Hartalega Holdings and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartalega Holdings and BP Plastics
The main advantage of trading using opposite Hartalega Holdings and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartalega Holdings position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.| Hartalega Holdings vs. RHB Bank Bhd | Hartalega Holdings vs. Duopharma Biotech Bhd | Hartalega Holdings vs. YTL Hospitality REIT | Hartalega Holdings vs. Greatech Technology Bhd |
| BP Plastics vs. Dnonce Tech Bhd | BP Plastics vs. Advanced Packaging Tech | BP Plastics vs. Al Aqar Healthcare | BP Plastics vs. PMB Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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