Correlation Between Bank Islam and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both Bank Islam 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 Bank Islam and Malayan Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Islam Malaysia and Malayan Banking Bhd, you can compare the effects of market volatilities on Bank Islam 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 Bank Islam with a short position of Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Islam and Malayan Banking.
Diversification Opportunities for Bank Islam and Malayan Banking
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Malayan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Islam Malaysia 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 Bank Islam 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 Bank Islam Malaysia 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 Bank Islam i.e., Bank Islam and Malayan Banking go up and down completely randomly.
Pair Corralation between Bank Islam and Malayan Banking
Assuming the 90 days trading horizon Bank Islam Malaysia is expected to generate 1.67 times more return on investment than Malayan Banking. However, Bank Islam is 1.67 times more volatile than Malayan Banking Bhd. It trades about -0.05 of its potential returns per unit of risk. Malayan Banking Bhd is currently generating about -0.09 per unit of risk. If you would invest 258.00 in Bank Islam Malaysia on October 18, 2024 and sell it today you would lose (13.00) from holding Bank Islam Malaysia or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Islam Malaysia vs. Malayan Banking Bhd
Performance |
| Timeline |
| Bank Islam Malaysia |
| Malayan Banking Bhd |
Bank Islam and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Islam and Malayan Banking
The main advantage of trading using opposite Bank Islam and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Islam 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.| Bank Islam vs. Malayan Banking Bhd | Bank Islam vs. Public Bank Bhd | Bank Islam vs. Petronas Chemicals Group | Bank Islam vs. Tenaga Nasional Bhd |
| Malayan Banking vs. Magni Tech Industries | Malayan Banking vs. Oriental Food Industries | Malayan Banking vs. Cloudpoint Technology Berhad | Malayan Banking vs. Homeritz 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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