Correlation Between Mr D and Sunway Construction
Can any of the company-specific risk be diversified away by investing in both Mr D and Sunway Construction 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 Mr D and Sunway Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mr D I and Sunway Construction Group, you can compare the effects of market volatilities on Mr D and Sunway Construction 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 Mr D with a short position of Sunway Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr D and Sunway Construction.
Diversification Opportunities for Mr D and Sunway Construction
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between 5296 and Sunway is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mr D I and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction and Mr D 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 Mr D I are associated (or correlated) with Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of Mr D i.e., Mr D and Sunway Construction go up and down completely randomly.
Pair Corralation between Mr D and Sunway Construction
Assuming the 90 days trading horizon Mr D is expected to generate 3.59 times less return on investment than Sunway Construction. But when comparing it to its historical volatility, Mr D I is 1.36 times less risky than Sunway Construction. It trades about 0.06 of its potential returns per unit of risk. Sunway Construction Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 186.00 in Sunway Construction Group on September 4, 2024 and sell it today you would earn a total of 267.00 from holding Sunway Construction Group or generate 143.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mr D I vs. Sunway Construction Group
Performance |
| Timeline |
| Mr D I |
| Sunway Construction |
Mr D and Sunway Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mr D and Sunway Construction
The main advantage of trading using opposite Mr D and Sunway Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr D position performs unexpectedly, Sunway Construction 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 Sunway Construction will offset losses from the drop in Sunway Construction's long position.| Mr D vs. Sports Toto Berhad | Mr D vs. Homeritz Bhd | Mr D vs. Star Media Group | Mr D vs. Sunway Construction Group |
| Sunway Construction vs. Pesona Metro Holdings | Sunway Construction vs. Ho Hup Construction | Sunway Construction vs. Central Industrial Corp |
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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