Correlation Between Magni Tech and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both Magni Tech and Binasat Communications 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 Magni Tech and Binasat Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magni Tech Industries and Binasat Communications Bhd, you can compare the effects of market volatilities on Magni Tech and Binasat Communications 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 Magni Tech with a short position of Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magni Tech and Binasat Communications.
Diversification Opportunities for Magni Tech and Binasat Communications
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magni and Binasat is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and Magni Tech 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 Magni Tech Industries are associated (or correlated) with Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Magni Tech i.e., Magni Tech and Binasat Communications go up and down completely randomly.
Pair Corralation between Magni Tech and Binasat Communications
Assuming the 90 days trading horizon Magni Tech Industries is expected to generate 0.3 times more return on investment than Binasat Communications. However, Magni Tech Industries is 3.35 times less risky than Binasat Communications. It trades about 0.46 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about 0.02 per unit of risk. If you would invest 245.00 in Magni Tech Industries on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Magni Tech Industries or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Magni Tech Industries vs. Binasat Communications Bhd
Performance |
| Timeline |
| Magni Tech Industries |
| Binasat Communications |
Magni Tech and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magni Tech and Binasat Communications
The main advantage of trading using opposite Magni Tech and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magni Tech position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.| Magni Tech vs. Digistar Bhd | Magni Tech vs. Minetech Resources Bhd | Magni Tech vs. OpenSys M Bhd | Magni Tech vs. Insas Bhd |
| Binasat Communications vs. Digistar Bhd | Binasat Communications vs. Minetech Resources Bhd | Binasat Communications vs. OpenSys M Bhd | Binasat Communications vs. Insas 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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