Correlation Between Hong Leong and YX Precious
Can any of the company-specific risk be diversified away by investing in both Hong Leong and YX Precious 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 Hong Leong and YX Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Leong Bank and YX Precious Metals, you can compare the effects of market volatilities on Hong Leong and YX Precious 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 Hong Leong with a short position of YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Leong and YX Precious.
Diversification Opportunities for Hong Leong and YX Precious
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hong and 0250 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hong Leong Bank and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals and Hong Leong 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 Hong Leong Bank are associated (or correlated) with YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of Hong Leong i.e., Hong Leong and YX Precious go up and down completely randomly.
Pair Corralation between Hong Leong and YX Precious
Assuming the 90 days trading horizon Hong Leong Bank is expected to under-perform the YX Precious. But the stock apears to be less risky and, when comparing its historical volatility, Hong Leong Bank is 1.83 times less risky than YX Precious. The stock trades about -0.12 of its potential returns per unit of risk. The YX Precious Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 24.00 in YX Precious Metals on October 16, 2024 and sell it today you would earn a total of 0.00 from holding YX Precious Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Leong Bank vs. YX Precious Metals
Performance |
| Timeline |
| Hong Leong Bank |
| YX Precious Metals |
Hong Leong and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Leong and YX Precious
The main advantage of trading using opposite Hong Leong and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Leong position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.| Hong Leong vs. Systech Bhd | Hong Leong vs. Binasat Communications Bhd | Hong Leong vs. IHH Healthcare Bhd | Hong Leong vs. Tex Cycle Technology |
| YX Precious vs. Star Media Group | YX Precious vs. Senheng New Retail | YX Precious vs. Tex Cycle Technology | YX Precious vs. PESTECH International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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