Correlation Between Press Metal and Systech Bhd
Can any of the company-specific risk be diversified away by investing in both Press Metal and Systech Bhd 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 Press Metal and Systech Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Press Metal Bhd and Systech Bhd, you can compare the effects of market volatilities on Press Metal and Systech Bhd 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 Press Metal with a short position of Systech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Press Metal and Systech Bhd.
Diversification Opportunities for Press Metal and Systech Bhd
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Press and Systech is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal Bhd and Systech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systech Bhd and Press Metal 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 Press Metal Bhd are associated (or correlated) with Systech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systech Bhd has no effect on the direction of Press Metal i.e., Press Metal and Systech Bhd go up and down completely randomly.
Pair Corralation between Press Metal and Systech Bhd
Assuming the 90 days trading horizon Press Metal is expected to generate 5.05 times less return on investment than Systech Bhd. But when comparing it to its historical volatility, Press Metal Bhd is 2.19 times less risky than Systech Bhd. It trades about 0.02 of its potential returns per unit of risk. Systech Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Systech Bhd on September 14, 2024 and sell it today you would earn a total of 8.00 from holding Systech Bhd or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Press Metal Bhd vs. Systech Bhd
Performance |
| Timeline |
| Press Metal Bhd |
| Systech Bhd |
Press Metal and Systech Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Press Metal and Systech Bhd
The main advantage of trading using opposite Press Metal and Systech Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Press Metal position performs unexpectedly, Systech Bhd 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 Systech Bhd will offset losses from the drop in Systech Bhd's long position.| Press Metal vs. PMB Technology Bhd | Press Metal vs. Pantech Group Holdings | Press Metal vs. CSC Steel Holdings | Press Metal vs. Coraza Integrated Technology |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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