Correlation Between Sime Darby and Techbond Group
Can any of the company-specific risk be diversified away by investing in both Sime Darby and Techbond Group 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 Techbond Group 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 Techbond Group Bhd, you can compare the effects of market volatilities on Sime Darby and Techbond Group 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 Techbond Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and Techbond Group.
Diversification Opportunities for Sime Darby and Techbond Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sime and Techbond is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and Techbond Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techbond Group 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 Techbond Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techbond Group Bhd has no effect on the direction of Sime Darby i.e., Sime Darby and Techbond Group go up and down completely randomly.
Pair Corralation between Sime Darby and Techbond Group
Assuming the 90 days trading horizon Sime Darby Plantation is expected to generate 1.31 times more return on investment than Techbond Group. However, Sime Darby is 1.31 times more volatile than Techbond Group Bhd. It trades about -0.08 of its potential returns per unit of risk. Techbond Group Bhd is currently generating about -0.3 per unit of risk. If you would invest 495.00 in Sime Darby Plantation on September 1, 2024 and sell it today you would lose (14.00) from holding Sime Darby Plantation or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sime Darby Plantation vs. Techbond Group Bhd
Performance |
| Timeline |
| Sime Darby Plantation |
| Techbond Group Bhd |
Sime Darby and Techbond Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and Techbond Group
The main advantage of trading using opposite Sime Darby and Techbond Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, Techbond Group 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 Techbond Group will offset losses from the drop in Techbond Group's long position.| Sime Darby vs. Kobay Tech Bhd | Sime Darby vs. Hong Leong Bank | Sime Darby vs. Sunzen Biotech Bhd | Sime Darby vs. Aeon Credit Service |
| Techbond Group vs. Kossan Rubber Industries | Techbond Group vs. Sports Toto Berhad | Techbond Group vs. YTL Hospitality REIT | Techbond Group vs. Apollo Food Holdings |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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