Correlation Between Hong Leong and Mesiniaga Bhd
Can any of the company-specific risk be diversified away by investing in both Hong Leong and Mesiniaga 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 Mesiniaga 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 Mesiniaga Bhd, you can compare the effects of market volatilities on Hong Leong and Mesiniaga 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 Mesiniaga Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Leong and Mesiniaga Bhd.
Diversification Opportunities for Hong Leong and Mesiniaga Bhd
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hong and Mesiniaga is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hong Leong Bank and Mesiniaga Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesiniaga 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 Mesiniaga Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesiniaga Bhd has no effect on the direction of Hong Leong i.e., Hong Leong and Mesiniaga Bhd go up and down completely randomly.
Pair Corralation between Hong Leong and Mesiniaga Bhd
Assuming the 90 days trading horizon Hong Leong is expected to generate 1.9 times less return on investment than Mesiniaga Bhd. But when comparing it to its historical volatility, Hong Leong Bank is 3.02 times less risky than Mesiniaga Bhd. It trades about 0.05 of its potential returns per unit of risk. Mesiniaga Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Mesiniaga Bhd on October 18, 2024 and sell it today you would earn a total of 15.00 from holding Mesiniaga Bhd or generate 10.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 91.36% |
Values | Daily Returns |
Hong Leong Bank vs. Mesiniaga Bhd
Performance |
Timeline |
Hong Leong Bank |
Mesiniaga Bhd |
Hong Leong and Mesiniaga Bhd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hong Leong and Mesiniaga Bhd
The main advantage of trading using opposite Hong Leong and Mesiniaga Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Leong position performs unexpectedly, Mesiniaga 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 Mesiniaga Bhd will offset losses from the drop in Mesiniaga Bhd's long position.Hong Leong vs. Computer Forms Bhd | Hong Leong vs. Leader Steel Holdings | Hong Leong vs. Tex Cycle Technology | Hong Leong vs. Mycron Steel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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