Correlation Between Press Metal and Eversafe Rubber
Can any of the company-specific risk be diversified away by investing in both Press Metal and Eversafe Rubber 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 Eversafe Rubber 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 Eversafe Rubber Bhd, you can compare the effects of market volatilities on Press Metal and Eversafe Rubber 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 Eversafe Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Press Metal and Eversafe Rubber.
Diversification Opportunities for Press Metal and Eversafe Rubber
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Press and Eversafe is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal Bhd and Eversafe Rubber Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversafe Rubber 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 Eversafe Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversafe Rubber Bhd has no effect on the direction of Press Metal i.e., Press Metal and Eversafe Rubber go up and down completely randomly.
Pair Corralation between Press Metal and Eversafe Rubber
Assuming the 90 days trading horizon Press Metal Bhd is expected to generate 0.54 times more return on investment than Eversafe Rubber. However, Press Metal Bhd is 1.85 times less risky than Eversafe Rubber. It trades about -0.01 of its potential returns per unit of risk. Eversafe Rubber Bhd is currently generating about -0.11 per unit of risk. If you would invest 473.00 in Press Metal Bhd on August 30, 2024 and sell it today you would lose (5.00) from holding Press Metal Bhd or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Press Metal Bhd vs. Eversafe Rubber Bhd
Performance |
| Timeline |
| Press Metal Bhd |
| Eversafe Rubber Bhd |
Press Metal and Eversafe Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Press Metal and Eversafe Rubber
The main advantage of trading using opposite Press Metal and Eversafe Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Press Metal position performs unexpectedly, Eversafe Rubber 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 Eversafe Rubber will offset losses from the drop in Eversafe Rubber's long position.| Press Metal vs. Diversified Gateway Solutions | Press Metal vs. YX Precious Metals | Press Metal vs. K One Technology Bhd | Press Metal vs. Computer Forms Bhd |
| Eversafe Rubber vs. Computer Forms Bhd | Eversafe Rubber vs. KPJ Healthcare Bhd | Eversafe Rubber vs. Press Metal Bhd | Eversafe Rubber vs. YX Precious Metals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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