Correlation Between Magni Tech and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Magni Tech and Sime Darby 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 Sime Darby 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 Sime Darby Plantation, you can compare the effects of market volatilities on Magni Tech and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magni Tech and Sime Darby.
Diversification Opportunities for Magni Tech and Sime Darby
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magni and Sime is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Magni Tech i.e., Magni Tech and Sime Darby go up and down completely randomly.
Pair Corralation between Magni Tech and Sime Darby
Assuming the 90 days trading horizon Magni Tech Industries is expected to generate 1.17 times more return on investment than Sime Darby. However, Magni Tech is 1.17 times more volatile than Sime Darby Plantation. It trades about 0.1 of its potential returns per unit of risk. Sime Darby Plantation is currently generating about 0.05 per unit of risk. If you would invest 177.00 in Magni Tech Industries on September 12, 2024 and sell it today you would earn a total of 111.00 from holding Magni Tech Industries or generate 62.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Magni Tech Industries vs. Sime Darby Plantation
Performance |
Timeline |
Magni Tech Industries |
Sime Darby Plantation |
Magni Tech and Sime Darby Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magni Tech and Sime Darby
The main advantage of trading using opposite Magni Tech and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magni Tech position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.Magni Tech vs. ES Ceramics Technology | Magni Tech vs. Al Aqar Healthcare | Magni Tech vs. PMB Technology Bhd | Magni Tech vs. Digistar 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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