Correlation Between Ho Hup and Meridian Bhd
Can any of the company-specific risk be diversified away by investing in both Ho Hup and Meridian Bhd 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 Ho Hup and Meridian Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ho Hup Construction and Meridian Bhd, you can compare the effects of market volatilities on Ho Hup and Meridian Bhd 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 Ho Hup with a short position of Meridian Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ho Hup and Meridian Bhd.
Diversification Opportunities for Ho Hup and Meridian Bhd
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 5169 and Meridian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ho Hup Construction and Meridian Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Bhd and Ho Hup 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 Ho Hup Construction are associated (or correlated) with Meridian Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Bhd has no effect on the direction of Ho Hup i.e., Ho Hup and Meridian Bhd go up and down completely randomly.
Pair Corralation between Ho Hup and Meridian Bhd
Assuming the 90 days trading horizon Ho Hup Construction is expected to under-perform the Meridian Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Ho Hup Construction is 1.74 times less risky than Meridian Bhd. The stock trades about -0.02 of its potential returns per unit of risk. The Meridian Bhd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Meridian Bhd on September 12, 2024 and sell it today you would earn a total of 0.50 from holding Meridian Bhd or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ho Hup Construction vs. Meridian Bhd
Performance |
| Timeline |
| Ho Hup Construction |
| Meridian Bhd |
Ho Hup and Meridian Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ho Hup and Meridian Bhd
The main advantage of trading using opposite Ho Hup and Meridian Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ho Hup position performs unexpectedly, Meridian Bhd 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 Meridian Bhd will offset losses from the drop in Meridian Bhd's long position.| Ho Hup vs. Sunway Construction Group | Ho Hup vs. PESTECH International Bhd | Ho Hup vs. Central Industrial Corp | Ho Hup vs. Mercury Industries Bhd |
| Meridian Bhd vs. Fitters Diversified Bhd | Meridian Bhd vs. Amalgamated Industrial Steel | Meridian Bhd vs. Al Aqar Healthcare | Meridian Bhd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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