Correlation Between Mr D and Press Metal
Can any of the company-specific risk be diversified away by investing in both Mr D and Press Metal 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 Press Metal 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 Press Metal Bhd, you can compare the effects of market volatilities on Mr D and Press Metal 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 Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr D and Press Metal.
Diversification Opportunities for Mr D and Press Metal
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 5296 and Press is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mr D I and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal Bhd 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Mr D i.e., Mr D and Press Metal go up and down completely randomly.
Pair Corralation between Mr D and Press Metal
Assuming the 90 days trading horizon Mr D I is expected to generate 1.05 times more return on investment than Press Metal. However, Mr D is 1.05 times more volatile than Press Metal Bhd. It trades about 0.04 of its potential returns per unit of risk. Press Metal Bhd is currently generating about 0.02 per unit of risk. If you would invest 156.00 in Mr D I on September 14, 2024 and sell it today you would earn a total of 26.00 from holding Mr D I or generate 16.67% 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. Press Metal Bhd
Performance |
| Timeline |
| Mr D I |
| Press Metal Bhd |
Mr D and Press Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mr D and Press Metal
The main advantage of trading using opposite Mr D and Press Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr D position performs unexpectedly, Press Metal 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 Press Metal will offset losses from the drop in Press Metal's long position.| Mr D vs. Press Metal Bhd | Mr D vs. Sapura Industrial Bhd | Mr D vs. Uchi Technologies Bhd | Mr D vs. Ho Hup Construction |
| Press Metal vs. PMB Technology Bhd | Press Metal vs. Pantech Group Holdings | Press Metal vs. CSC Steel Holdings | Press Metal vs. Coraza Integrated Technology |
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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