Correlation Between Hartalega Holdings and Southern Steel
Can any of the company-specific risk be diversified away by investing in both Hartalega Holdings and Southern Steel 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 Southern Steel 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 Southern Steel Bhd, you can compare the effects of market volatilities on Hartalega Holdings and Southern Steel 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 Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartalega Holdings and Southern Steel.
Diversification Opportunities for Hartalega Holdings and Southern Steel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartalega and Southern is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hartalega Holdings Bhd and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd 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 Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of Hartalega Holdings i.e., Hartalega Holdings and Southern Steel go up and down completely randomly.
Pair Corralation between Hartalega Holdings and Southern Steel
Assuming the 90 days trading horizon Hartalega Holdings Bhd is expected to generate 1.01 times more return on investment than Southern Steel. However, Hartalega Holdings is 1.01 times more volatile than Southern Steel Bhd. It trades about 0.04 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.01 per unit of risk. If you would invest 150.00 in Hartalega Holdings Bhd on December 2, 2024 and sell it today you would earn a total of 75.00 from holding Hartalega Holdings Bhd or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartalega Holdings Bhd vs. Southern Steel Bhd
Performance |
| Timeline |
| Hartalega Holdings Bhd |
| Southern Steel Bhd |
Hartalega Holdings and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartalega Holdings and Southern Steel
The main advantage of trading using opposite Hartalega Holdings and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartalega Holdings position performs unexpectedly, Southern Steel 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| Hartalega Holdings vs. Privasia Technology Bhd | Hartalega Holdings vs. Media Prima Bhd | Hartalega Holdings vs. Ho Hup Construction | Hartalega Holdings vs. Awanbiru Technology Bhd |
| Southern Steel vs. Apollo Food Holdings | Southern Steel vs. Apex Healthcare Bhd | Southern Steel vs. Berjaya Food Bhd | Southern Steel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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