Correlation Between Sime Darby and Leader Steel
Can any of the company-specific risk be diversified away by investing in both Sime Darby and Leader Steel 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 Leader Steel 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 Leader Steel Holdings, you can compare the effects of market volatilities on Sime Darby and Leader Steel 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 Leader Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and Leader Steel.
Diversification Opportunities for Sime Darby and Leader Steel
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sime and Leader is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and Leader Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Steel Holdings 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 Leader Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Steel Holdings has no effect on the direction of Sime Darby i.e., Sime Darby and Leader Steel go up and down completely randomly.
Pair Corralation between Sime Darby and Leader Steel
Assuming the 90 days trading horizon Sime Darby Plantation is expected to generate 0.5 times more return on investment than Leader Steel. However, Sime Darby Plantation is 1.99 times less risky than Leader Steel. It trades about 0.05 of its potential returns per unit of risk. Leader Steel Holdings is currently generating about 0.0 per unit of risk. If you would invest 422.00 in Sime Darby Plantation on September 15, 2024 and sell it today you would earn a total of 74.00 from holding Sime Darby Plantation or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Sime Darby Plantation vs. Leader Steel Holdings
Performance |
| Timeline |
| Sime Darby Plantation |
| Leader Steel Holdings |
Sime Darby and Leader Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sime Darby and Leader Steel
The main advantage of trading using opposite Sime Darby and Leader Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, Leader Steel 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 Leader Steel will offset losses from the drop in Leader Steel's long position.| Sime Darby vs. Leader Steel Holdings | Sime Darby vs. Al Aqar Healthcare | Sime Darby vs. SFP Tech Holdings | Sime Darby vs. Magni Tech Industries |
| Leader Steel vs. Press Metal Bhd | Leader Steel vs. PMB Technology Bhd | Leader Steel vs. Pantech Group Holdings | Leader Steel vs. CSC Steel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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