Correlation Between Press Metal and PESTECH International
Can any of the company-specific risk be diversified away by investing in both Press Metal and PESTECH International 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 PESTECH International 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 PESTECH International Bhd, you can compare the effects of market volatilities on Press Metal and PESTECH International 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 PESTECH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Press Metal and PESTECH International.
Diversification Opportunities for Press Metal and PESTECH International
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Press and PESTECH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal Bhd and PESTECH International Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PESTECH International 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 PESTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PESTECH International Bhd has no effect on the direction of Press Metal i.e., Press Metal and PESTECH International go up and down completely randomly.
Pair Corralation between Press Metal and PESTECH International
Assuming the 90 days trading horizon Press Metal is expected to generate 3.29 times less return on investment than PESTECH International. But when comparing it to its historical volatility, Press Metal Bhd is 3.06 times less risky than PESTECH International. It trades about 0.1 of its potential returns per unit of risk. PESTECH International Bhd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 14.00 in PESTECH International Bhd on October 30, 2024 and sell it today you would earn a total of 3.00 from holding PESTECH International Bhd or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Press Metal Bhd vs. PESTECH International Bhd
Performance |
| Timeline |
| Press Metal Bhd |
| PESTECH International Bhd |
Press Metal and PESTECH International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Press Metal and PESTECH International
The main advantage of trading using opposite Press Metal and PESTECH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Press Metal position performs unexpectedly, PESTECH International 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 PESTECH International will offset losses from the drop in PESTECH International's long position.| Press Metal vs. Petronas Chemicals Group | Press Metal vs. Resintech Bhd | Press Metal vs. Cosmos Technology International | Press Metal vs. Radiant Globaltech Bhd |
| PESTECH International vs. Sungei Bagan Rubber | PESTECH International vs. FARM FRESH BERHAD | PESTECH International vs. CSC Steel Holdings | PESTECH International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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