Correlation Between Magni Tech and Shangri La
Can any of the company-specific risk be diversified away by investing in both Magni Tech and Shangri La 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 Shangri La 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 Shangri La Hotels, you can compare the effects of market volatilities on Magni Tech and Shangri La 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 Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magni Tech and Shangri La.
Diversification Opportunities for Magni Tech and Shangri La
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magni and Shangri is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels 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 Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Magni Tech i.e., Magni Tech and Shangri La go up and down completely randomly.
Pair Corralation between Magni Tech and Shangri La
Assuming the 90 days trading horizon Magni Tech Industries is expected to under-perform the Shangri La. In addition to that, Magni Tech is 1.54 times more volatile than Shangri La Hotels. It trades about -0.02 of its total potential returns per unit of risk. Shangri La Hotels is currently generating about 0.05 per unit of volatility. If you would invest 200.00 in Shangri La Hotels on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Shangri La Hotels or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magni Tech Industries vs. Shangri La Hotels
Performance |
| Timeline |
| Magni Tech Industries |
| Shangri La Hotels |
Magni Tech and Shangri La Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magni Tech and Shangri La
The main advantage of trading using opposite Magni Tech and Shangri La positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magni Tech position performs unexpectedly, Shangri La 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 Shangri La will offset losses from the drop in Shangri La's long position.| Magni Tech vs. Lyc Healthcare Bhd | Magni Tech vs. MI Technovation Bhd | Magni Tech vs. Radiant Globaltech Bhd | Magni Tech vs. CPE Technology Berhad |
| Shangri La vs. Homeritz Bhd | Shangri La vs. Media Prima Bhd | Shangri La vs. Binasat Communications Bhd | Shangri La vs. Mycron Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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