Correlation Between Senheng New and DRB Hicom
Can any of the company-specific risk be diversified away by investing in both Senheng New and DRB Hicom 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 Senheng New and DRB Hicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senheng New Retail and DRB Hicom, you can compare the effects of market volatilities on Senheng New and DRB Hicom 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 Senheng New with a short position of DRB Hicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and DRB Hicom.
Diversification Opportunities for Senheng New and DRB Hicom
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Senheng and DRB is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and DRB Hicom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRB Hicom and Senheng New 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 Senheng New Retail are associated (or correlated) with DRB Hicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRB Hicom has no effect on the direction of Senheng New i.e., Senheng New and DRB Hicom go up and down completely randomly.
Pair Corralation between Senheng New and DRB Hicom
Assuming the 90 days trading horizon Senheng New Retail is expected to under-perform the DRB Hicom. In addition to that, Senheng New is 1.62 times more volatile than DRB Hicom. It trades about -0.04 of its total potential returns per unit of risk. DRB Hicom is currently generating about -0.05 per unit of volatility. If you would invest 138.00 in DRB Hicom on August 31, 2024 and sell it today you would lose (38.00) from holding DRB Hicom or give up 27.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senheng New Retail vs. DRB Hicom
Performance |
| Timeline |
| Senheng New Retail |
| DRB Hicom |
Senheng New and DRB Hicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senheng New and DRB Hicom
The main advantage of trading using opposite Senheng New and DRB Hicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senheng New position performs unexpectedly, DRB Hicom 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 DRB Hicom will offset losses from the drop in DRB Hicom's long position.| Senheng New vs. Radiant Globaltech Bhd | Senheng New vs. Digistar Bhd | Senheng New vs. Minetech Resources Bhd | Senheng New vs. Swift Haulage Bhd |
| DRB Hicom vs. Sports Toto Berhad | DRB Hicom vs. YX Precious Metals | DRB Hicom vs. Senheng New Retail | DRB Hicom vs. Eonmetall Group Bhd |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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