Correlation Between Sapura Industrial and Shangri La
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and Shangri La 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 Shangri La 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 Shangri La Hotels, you can compare the effects of market volatilities on Sapura Industrial and Shangri La 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 Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and Shangri La.
Diversification Opportunities for Sapura Industrial and Shangri La
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sapura and Shangri is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels 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 Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and Shangri La go up and down completely randomly.
Pair Corralation between Sapura Industrial and Shangri La
Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 0.72 times more return on investment than Shangri La. However, Sapura Industrial Bhd is 1.38 times less risky than Shangri La. It trades about 0.32 of its potential returns per unit of risk. Shangri La Hotels is currently generating about 0.05 per unit of risk. If you would invest 86.00 in Sapura Industrial Bhd on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Sapura Industrial Bhd or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. Shangri La Hotels
Performance |
| Timeline |
| Sapura Industrial Bhd |
| Shangri La Hotels |
Sapura Industrial and Shangri La Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and Shangri La
The main advantage of trading using opposite Sapura Industrial and Shangri La positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial position performs unexpectedly, Shangri La 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 Shangri La will offset losses from the drop in Shangri La's long position.| Sapura Industrial vs. Eversafe Rubber Bhd | Sapura Industrial vs. Mesiniaga Bhd | Sapura Industrial vs. MSCM Holdings Bhd | Sapura Industrial vs. Supermax Bhd |
| Shangri La vs. Homeritz Bhd | Shangri La vs. Media Prima Bhd | Shangri La vs. Binasat Communications Bhd | Shangri La vs. Mycron Steel 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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