Correlation Between Shangri La and Texchem Resources
Can any of the company-specific risk be diversified away by investing in both Shangri La and Texchem Resources 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 Texchem Resources 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 Texchem Resources Bhd, you can compare the effects of market volatilities on Shangri La and Texchem Resources 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 Texchem Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Texchem Resources.
Diversification Opportunities for Shangri La and Texchem Resources
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shangri and Texchem is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Texchem Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texchem Resources 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 Texchem Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texchem Resources Bhd has no effect on the direction of Shangri La i.e., Shangri La and Texchem Resources go up and down completely randomly.
Pair Corralation between Shangri La and Texchem Resources
Assuming the 90 days trading horizon Shangri La Hotels is expected to generate 0.34 times more return on investment than Texchem Resources. However, Shangri La Hotels is 2.97 times less risky than Texchem Resources. It trades about -0.07 of its potential returns per unit of risk. Texchem Resources Bhd is currently generating about -0.03 per unit of risk. If you would invest 201.00 in Shangri La Hotels on November 28, 2024 and sell it today you would lose (2.00) from holding Shangri La Hotels or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotels vs. Texchem Resources Bhd
Performance |
| Timeline |
| Shangri La Hotels |
| Texchem Resources Bhd |
Shangri La and Texchem Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Texchem Resources
The main advantage of trading using opposite Shangri La and Texchem Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Texchem Resources 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 Texchem Resources will offset losses from the drop in Texchem Resources' long position.| Shangri La vs. Petronas Chemicals Group | Shangri La vs. BP Plastics Holding | Shangri La vs. SSF Home Group | Shangri La vs. DC HEALTHCARE HOLDINGS |
| Texchem Resources vs. Press Metal Bhd | Texchem Resources vs. Malaysia Steel Works | Texchem Resources vs. YX Precious Metals | Texchem Resources vs. Lotte Chemical Titan |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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