Correlation Between PIE Industrial and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both PIE Industrial and Malaysia Steel 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 PIE Industrial and Malaysia Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Malaysia Steel Works, you can compare the effects of market volatilities on PIE Industrial and Malaysia Steel 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 PIE Industrial with a short position of Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Malaysia Steel.
Diversification Opportunities for PIE Industrial and Malaysia Steel
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PIE and Malaysia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of PIE Industrial i.e., PIE Industrial and Malaysia Steel go up and down completely randomly.
Pair Corralation between PIE Industrial and Malaysia Steel
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to under-perform the Malaysia Steel. In addition to that, PIE Industrial is 1.29 times more volatile than Malaysia Steel Works. It trades about -0.51 of its total potential returns per unit of risk. Malaysia Steel Works is currently generating about -0.15 per unit of volatility. If you would invest 32.00 in Malaysia Steel Works on November 4, 2024 and sell it today you would lose (2.00) from holding Malaysia Steel Works or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIE Industrial Bhd vs. Malaysia Steel Works
Performance |
| Timeline |
| PIE Industrial Bhd |
| Malaysia Steel Works |
PIE Industrial and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and Malaysia Steel
The main advantage of trading using opposite PIE Industrial and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial position performs unexpectedly, Malaysia Steel 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.| PIE Industrial vs. Kobay Tech Bhd | PIE Industrial vs. Systech Bhd | PIE Industrial vs. Radiant Globaltech Bhd | PIE Industrial vs. Pantech Group Holdings |
| Malaysia Steel vs. Eonmetall Group Bhd | Malaysia Steel vs. CPE Technology Berhad | Malaysia Steel vs. ECM Libra Financial | Malaysia Steel vs. Public Bank 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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