Correlation Between Sime Darby and Awanbiru Technology
Can any of the company-specific risk be diversified away by investing in both Sime Darby and Awanbiru Technology 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 Sime Darby and Awanbiru Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sime Darby Plantation and Awanbiru Technology Bhd, you can compare the effects of market volatilities on Sime Darby and Awanbiru Technology 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 Sime Darby with a short position of Awanbiru Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and Awanbiru Technology.
Diversification Opportunities for Sime Darby and Awanbiru Technology
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sime and Awanbiru is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and Awanbiru Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awanbiru Technology Bhd and Sime Darby 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 Sime Darby Plantation are associated (or correlated) with Awanbiru Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awanbiru Technology Bhd has no effect on the direction of Sime Darby i.e., Sime Darby and Awanbiru Technology go up and down completely randomly.
Pair Corralation between Sime Darby and Awanbiru Technology
Assuming the 90 days trading horizon Sime Darby is expected to generate 3.3 times less return on investment than Awanbiru Technology. But when comparing it to its historical volatility, Sime Darby Plantation is 4.05 times less risky than Awanbiru Technology. It trades about 0.03 of its potential returns per unit of risk. Awanbiru Technology Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Awanbiru Technology Bhd on October 9, 2024 and sell it today you would lose (4.00) from holding Awanbiru Technology Bhd or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sime Darby Plantation vs. Awanbiru Technology Bhd
Performance |
| Timeline |
| Sime Darby Plantation |
| Awanbiru Technology Bhd |
Sime Darby and Awanbiru Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and Awanbiru Technology
The main advantage of trading using opposite Sime Darby and Awanbiru Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, Awanbiru Technology 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 Awanbiru Technology will offset losses from the drop in Awanbiru Technology's long position.| Sime Darby vs. BP Plastics Holding | Sime Darby vs. Malaysia Steel Works | Sime Darby vs. Binasat Communications Bhd | Sime Darby vs. Media Prima Bhd |
| Awanbiru Technology vs. CPE Technology Berhad | Awanbiru Technology vs. Oriental Food Industries | Awanbiru Technology vs. K One Technology Bhd | Awanbiru Technology vs. Uchi Technologies 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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