Correlation Between Top Glove and Malayan Banking
Can any of the company-specific risk be diversified away by investing in both Top Glove and Malayan Banking 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 Top Glove and Malayan Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and Malayan Banking Bhd, you can compare the effects of market volatilities on Top Glove and Malayan Banking 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 Top Glove with a short position of Malayan Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and Malayan Banking.
Diversification Opportunities for Top Glove and Malayan Banking
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Top and Malayan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Malayan Banking Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malayan Banking Bhd and Top Glove 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 Top Glove are associated (or correlated) with Malayan Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malayan Banking Bhd has no effect on the direction of Top Glove i.e., Top Glove and Malayan Banking go up and down completely randomly.
Pair Corralation between Top Glove and Malayan Banking
Assuming the 90 days trading horizon Top Glove is expected to generate 5.47 times more return on investment than Malayan Banking. However, Top Glove is 5.47 times more volatile than Malayan Banking Bhd. It trades about 0.07 of its potential returns per unit of risk. Malayan Banking Bhd is currently generating about -0.02 per unit of risk. If you would invest 97.00 in Top Glove on November 2, 2024 and sell it today you would earn a total of 23.00 from holding Top Glove or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Glove vs. Malayan Banking Bhd
Performance |
| Timeline |
| Top Glove |
| Malayan Banking Bhd |
Top Glove and Malayan Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and Malayan Banking
The main advantage of trading using opposite Top Glove and Malayan Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, Malayan Banking 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 Malayan Banking will offset losses from the drop in Malayan Banking's long position.| Top Glove vs. Berjaya Food Bhd | Top Glove vs. Carlsberg Brewery Malaysia | Top Glove vs. Kawan Food Bhd | Top Glove vs. Malayan Banking Bhd |
| Malayan Banking vs. Press Metal Bhd | Malayan Banking vs. Computer Forms Bhd | Malayan Banking vs. Melewar Industrial Group | Malayan Banking vs. Kluang Rubber |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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