Correlation Between PMB Technology and Leader Steel
Can any of the company-specific risk be diversified away by investing in both PMB Technology and Leader 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 PMB Technology and Leader Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PMB Technology Bhd and Leader Steel Holdings, you can compare the effects of market volatilities on PMB Technology and Leader 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 PMB Technology with a short position of Leader Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMB Technology and Leader Steel.
Diversification Opportunities for PMB Technology and Leader Steel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PMB and Leader is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PMB Technology Bhd and Leader Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Steel Holdings and PMB Technology 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 PMB Technology Bhd are associated (or correlated) with Leader Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Steel Holdings has no effect on the direction of PMB Technology i.e., PMB Technology and Leader Steel go up and down completely randomly.
Pair Corralation between PMB Technology and Leader Steel
Assuming the 90 days trading horizon PMB Technology Bhd is expected to under-perform the Leader Steel. In addition to that, PMB Technology is 1.26 times more volatile than Leader Steel Holdings. It trades about -0.05 of its total potential returns per unit of risk. Leader Steel Holdings is currently generating about 0.02 per unit of volatility. If you would invest 46.00 in Leader Steel Holdings on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Leader Steel Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PMB Technology Bhd vs. Leader Steel Holdings
Performance |
| Timeline |
| PMB Technology Bhd |
| Leader Steel Holdings |
PMB Technology and Leader Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PMB Technology and Leader Steel
The main advantage of trading using opposite PMB Technology and Leader Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PMB Technology position performs unexpectedly, Leader 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 Leader Steel will offset losses from the drop in Leader Steel's long position.| PMB Technology vs. Tex Cycle Technology | PMB Technology vs. Aeon Credit Service | PMB Technology vs. Public Bank Bhd | PMB Technology vs. Alliance Financial Group |
| Leader Steel vs. Press Metal Bhd | Leader Steel vs. PMB Technology Bhd | Leader Steel vs. Pantech Group Holdings | Leader Steel vs. CSC Steel Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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