Correlation Between Top Glove and Protasco Bhd
Can any of the company-specific risk be diversified away by investing in both Top Glove and Protasco Bhd 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 Protasco Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and Protasco Bhd, you can compare the effects of market volatilities on Top Glove and Protasco Bhd 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 Protasco Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and Protasco Bhd.
Diversification Opportunities for Top Glove and Protasco Bhd
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Top and Protasco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Protasco Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protasco 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 Protasco Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protasco Bhd has no effect on the direction of Top Glove i.e., Top Glove and Protasco Bhd go up and down completely randomly.
Pair Corralation between Top Glove and Protasco Bhd
Assuming the 90 days trading horizon Top Glove is expected to generate 1.02 times less return on investment than Protasco Bhd. But when comparing it to its historical volatility, Top Glove is 1.26 times less risky than Protasco Bhd. It trades about 0.07 of its potential returns per unit of risk. Protasco Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Protasco Bhd on November 2, 2024 and sell it today you would earn a total of 6.00 from holding Protasco Bhd or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Glove vs. Protasco Bhd
Performance |
| Timeline |
| Top Glove |
| Protasco Bhd |
Top Glove and Protasco Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and Protasco Bhd
The main advantage of trading using opposite Top Glove and Protasco Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, Protasco Bhd 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 Protasco Bhd will offset losses from the drop in Protasco Bhd'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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