Correlation Between Shangri La and Sapura Industrial
Can any of the company-specific risk be diversified away by investing in both Shangri La and Sapura Industrial 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 Shangri La and Sapura Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and Sapura Industrial Bhd, you can compare the effects of market volatilities on Shangri La and Sapura Industrial 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 Shangri La with a short position of Sapura Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Sapura Industrial.
Diversification Opportunities for Shangri La and Sapura Industrial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shangri and Sapura is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial Bhd and Shangri La 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 Shangri La Hotels are associated (or correlated) with Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Shangri La i.e., Shangri La and Sapura Industrial go up and down completely randomly.
Pair Corralation between Shangri La and Sapura Industrial
Assuming the 90 days trading horizon Shangri La is expected to generate 4.42 times less return on investment than Sapura Industrial. In addition to that, Shangri La is 1.38 times more volatile than Sapura Industrial Bhd. It trades about 0.05 of its total potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.32 per unit of volatility. If you would invest 86.00 in Sapura Industrial Bhd on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Sapura Industrial Bhd or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shangri La Hotels vs. Sapura Industrial Bhd
Performance |
| Timeline |
| Shangri La Hotels |
| Sapura Industrial Bhd |
Shangri La and Sapura Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Sapura Industrial
The main advantage of trading using opposite Shangri La and Sapura Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Sapura Industrial 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 Sapura Industrial will offset losses from the drop in Sapura Industrial's long position.| Shangri La vs. Homeritz Bhd | Shangri La vs. Media Prima Bhd | Shangri La vs. Binasat Communications Bhd | Shangri La vs. Mycron Steel Bhd |
| Sapura Industrial vs. Eversafe Rubber Bhd | Sapura Industrial vs. Mesiniaga Bhd | Sapura Industrial vs. MSCM Holdings Bhd | Sapura Industrial vs. Supermax 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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