Correlation Between Sime Darby and Sapura Industrial
Can any of the company-specific risk be diversified away by investing in both Sime Darby and Sapura Industrial 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 Sapura Industrial 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 Sapura Industrial Bhd, you can compare the effects of market volatilities on Sime Darby and Sapura Industrial 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 Sapura Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and Sapura Industrial.
Diversification Opportunities for Sime Darby and Sapura Industrial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sime and Sapura is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Sime Darby i.e., Sime Darby and Sapura Industrial go up and down completely randomly.
Pair Corralation between Sime Darby and Sapura Industrial
Assuming the 90 days trading horizon Sime Darby Plantation is expected to under-perform the Sapura Industrial. In addition to that, Sime Darby is 1.01 times more volatile than Sapura Industrial Bhd. It trades about -0.02 of its total potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.04 per unit of volatility. If you would invest 88.00 in Sapura Industrial Bhd on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Sapura Industrial Bhd or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sime Darby Plantation vs. Sapura Industrial Bhd
Performance |
| Timeline |
| Sime Darby Plantation |
| Sapura Industrial Bhd |
Sime Darby and Sapura Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and Sapura Industrial
The main advantage of trading using opposite Sime Darby and Sapura Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, Sapura Industrial 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 Sapura Industrial will offset losses from the drop in Sapura Industrial's long position.| Sime Darby vs. Icon Offshore Bhd | Sime Darby vs. Senheng New Retail | Sime Darby vs. MClean Technologies Bhd | Sime Darby vs. Datasonic Group Bhd |
| Sapura Industrial vs. Icon Offshore Bhd | Sapura Industrial vs. Petronas Chemicals Group | Sapura Industrial vs. YX Precious Metals | Sapura Industrial vs. Choo Bee Metal |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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