Correlation Between Sapura Industrial and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and Sime Darby 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 Sime Darby 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 Sime Darby Plantation, you can compare the effects of market volatilities on Sapura Industrial and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and Sime Darby.
Diversification Opportunities for Sapura Industrial and Sime Darby
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sapura and Sime is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and Sime Darby go up and down completely randomly.
Pair Corralation between Sapura Industrial and Sime Darby
Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to under-perform the Sime Darby. In addition to that, Sapura Industrial is 1.57 times more volatile than Sime Darby Plantation. It trades about -0.08 of its total potential returns per unit of risk. Sime Darby Plantation is currently generating about 0.02 per unit of volatility. If you would invest 488.00 in Sime Darby Plantation on October 25, 2024 and sell it today you would earn a total of 2.00 from holding Sime Darby Plantation or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. Sime Darby Plantation
Performance |
| Timeline |
| Sapura Industrial Bhd |
| Sime Darby Plantation |
Sapura Industrial and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and Sime Darby
The main advantage of trading using opposite Sapura Industrial and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Sapura Industrial vs. Binasat Communications Bhd | Sapura Industrial vs. Senheng New Retail | Sapura Industrial vs. Al Aqar Healthcare | Sapura Industrial vs. DC HEALTHCARE HOLDINGS |
| Sime Darby vs. CB Industrial Product | Sime Darby vs. PIE Industrial Bhd | Sime Darby vs. Sapura Industrial Bhd | Sime Darby vs. Sports Toto Berhad |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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