Correlation Between Hong Leong and MISC Bhd
Can any of the company-specific risk be diversified away by investing in both Hong Leong and MISC Bhd 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 MISC Bhd 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 MISC Bhd, you can compare the effects of market volatilities on Hong Leong and MISC Bhd 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 MISC Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Leong and MISC Bhd.
Diversification Opportunities for Hong Leong and MISC Bhd
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hong and MISC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hong Leong Bank and MISC Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MISC Bhd 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 MISC Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MISC Bhd has no effect on the direction of Hong Leong i.e., Hong Leong and MISC Bhd go up and down completely randomly.
Pair Corralation between Hong Leong and MISC Bhd
Assuming the 90 days trading horizon Hong Leong Bank is expected to under-perform the MISC Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Hong Leong Bank is 1.81 times less risky than MISC Bhd. The stock trades about -0.12 of its potential returns per unit of risk. The MISC Bhd is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 770.00 in MISC Bhd on August 24, 2024 and sell it today you would lose (15.00) from holding MISC Bhd or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Leong Bank vs. MISC Bhd
Performance |
| Timeline |
| Hong Leong Bank |
| MISC Bhd |
Hong Leong and MISC Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Leong and MISC Bhd
The main advantage of trading using opposite Hong Leong and MISC Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Leong position performs unexpectedly, MISC Bhd 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 MISC Bhd will offset losses from the drop in MISC Bhd's long position.| Hong Leong vs. Public Bank Bhd | Hong Leong vs. Cloudpoint Technology Berhad | Hong Leong vs. CPE Technology Berhad | Hong Leong vs. Privasia Technology Bhd |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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