Correlation Between Star Media and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both Star Media and Melewar 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 Star Media and Melewar Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Media Group and Melewar Industrial Group, you can compare the effects of market volatilities on Star Media and Melewar 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 Star Media with a short position of Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Melewar Industrial.
Diversification Opportunities for Star Media and Melewar Industrial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Star and Melewar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial and Star Media 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 Star Media Group are associated (or correlated) with Melewar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melewar Industrial has no effect on the direction of Star Media i.e., Star Media and Melewar Industrial go up and down completely randomly.
Pair Corralation between Star Media and Melewar Industrial
Assuming the 90 days trading horizon Star Media Group is expected to under-perform the Melewar Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Star Media Group is 1.3 times less risky than Melewar Industrial. The stock trades about 0.0 of its potential returns per unit of risk. The Melewar Industrial Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Melewar Industrial Group on August 31, 2024 and sell it today you would lose (3.00) from holding Melewar Industrial Group or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Media Group vs. Melewar Industrial Group
Performance |
| Timeline |
| Star Media Group |
| Melewar Industrial |
Star Media and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Melewar Industrial
The main advantage of trading using opposite Star Media and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media position performs unexpectedly, Melewar 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 Melewar Industrial will offset losses from the drop in Melewar Industrial's long position.| Star Media vs. Datasonic Group Bhd | Star Media vs. Malayan Banking Bhd | Star Media vs. JF Technology BHD | Star Media vs. Awanbiru Technology Bhd |
| Melewar Industrial vs. Pantech Group Holdings | Melewar Industrial vs. Coraza Integrated Technology | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Eonmetall Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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