Correlation Between Senheng New and Southern Steel
Can any of the company-specific risk be diversified away by investing in both Senheng New and Southern 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 Senheng New and Southern Steel 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 Southern Steel Bhd, you can compare the effects of market volatilities on Senheng New and Southern 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 Senheng New with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and Southern Steel.
Diversification Opportunities for Senheng New and Southern Steel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Senheng and Southern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd 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 Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of Senheng New i.e., Senheng New and Southern Steel go up and down completely randomly.
Pair Corralation between Senheng New and Southern Steel
Assuming the 90 days trading horizon Senheng New Retail is expected to generate 1.7 times more return on investment than Southern Steel. However, Senheng New is 1.7 times more volatile than Southern Steel Bhd. It trades about -0.13 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.25 per unit of risk. If you would invest 26.00 in Senheng New Retail on November 28, 2024 and sell it today you would lose (2.00) from holding Senheng New Retail or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senheng New Retail vs. Southern Steel Bhd
Performance |
| Timeline |
| Senheng New Retail |
| Southern Steel Bhd |
Senheng New and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senheng New and Southern Steel
The main advantage of trading using opposite Senheng New and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senheng New position performs unexpectedly, Southern 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| Senheng New vs. Privasia Technology Bhd | Senheng New vs. KPJ Healthcare Bhd | Senheng New vs. Eversafe Rubber Bhd | Senheng New vs. Lyc Healthcare Bhd |
| Southern Steel vs. Kawan Food Bhd | Southern Steel vs. Carlsberg Brewery Malaysia | Southern Steel vs. Cloudpoint Technology Berhad | Southern Steel 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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