Correlation Between Sapura Industrial and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and Melewar Industrial 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 Sapura Industrial and Melewar Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapura Industrial Bhd and Melewar Industrial Group, you can compare the effects of market volatilities on Sapura Industrial and Melewar Industrial 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 Sapura Industrial with a short position of Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and Melewar Industrial.
Diversification Opportunities for Sapura Industrial and Melewar Industrial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sapura and Melewar is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial and Sapura 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 Sapura Industrial Bhd are associated (or correlated) with Melewar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melewar Industrial has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and Melewar Industrial go up and down completely randomly.
Pair Corralation between Sapura Industrial and Melewar Industrial
Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 1.24 times more return on investment than Melewar Industrial. However, Sapura Industrial is 1.24 times more volatile than Melewar Industrial Group. It trades about 0.02 of its potential returns per unit of risk. Melewar Industrial Group is currently generating about 0.0 per unit of risk. If you would invest 77.00 in Sapura Industrial Bhd on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Sapura Industrial Bhd or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. Melewar Industrial Group
Performance |
| Timeline |
| Sapura Industrial Bhd |
| Melewar Industrial |
Sapura Industrial and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and Melewar Industrial
The main advantage of trading using opposite Sapura Industrial and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial position performs unexpectedly, Melewar Industrial 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 Melewar Industrial will offset losses from the drop in Melewar Industrial's long position.| Sapura Industrial vs. Digistar Bhd | Sapura Industrial vs. Minetech Resources Bhd | Sapura Industrial vs. Swift Haulage Bhd | Sapura Industrial vs. Bina Darulaman Bhd |
| Melewar Industrial vs. Pantech Group Holdings | Melewar Industrial vs. Coraza Integrated Technology | Melewar Industrial vs. Choo Bee Metal | Melewar Industrial vs. Eonmetall Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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