Correlation Between Sapura Industrial and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and BP Plastics 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 BP Plastics 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 BP Plastics Holding, you can compare the effects of market volatilities on Sapura Industrial and BP Plastics 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 BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and BP Plastics.
Diversification Opportunities for Sapura Industrial and BP Plastics
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sapura and 5100 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding 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 BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and BP Plastics go up and down completely randomly.
Pair Corralation between Sapura Industrial and BP Plastics
Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to under-perform the BP Plastics. In addition to that, Sapura Industrial is 1.32 times more volatile than BP Plastics Holding. It trades about 0.0 of its total potential returns per unit of risk. BP Plastics Holding is currently generating about 0.09 per unit of volatility. If you would invest 119.00 in BP Plastics Holding on October 7, 2024 and sell it today you would earn a total of 4.00 from holding BP Plastics Holding or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. BP Plastics Holding
Performance |
| Timeline |
| Sapura Industrial Bhd |
| BP Plastics Holding |
Sapura Industrial and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and BP Plastics
The main advantage of trading using opposite Sapura Industrial and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.| Sapura Industrial vs. Eversafe Rubber Bhd | Sapura Industrial vs. Minetech Resources Bhd | Sapura Industrial vs. Tambun Indah Land | Sapura Industrial vs. OpenSys M Bhd |
| BP Plastics vs. Magni Tech Industries | BP Plastics vs. Brite Tech Bhd | BP Plastics vs. Dufu Tech Corp | BP Plastics vs. Icon Offshore 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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