Correlation Between Astar and Bank Islam
Can any of the company-specific risk be diversified away by investing in both Astar and Bank Islam 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 Astar and Bank Islam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Bank Islam Malaysia, you can compare the effects of market volatilities on Astar and Bank Islam 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 Astar with a short position of Bank Islam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Bank Islam.
Diversification Opportunities for Astar and Bank Islam
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astar and Bank is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Bank Islam Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Islam Malaysia and Astar 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 Astar are associated (or correlated) with Bank Islam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Islam Malaysia has no effect on the direction of Astar i.e., Astar and Bank Islam go up and down completely randomly.
Pair Corralation between Astar and Bank Islam
Assuming the 90 days trading horizon Astar is expected to generate 4.56 times more return on investment than Bank Islam. However, Astar is 4.56 times more volatile than Bank Islam Malaysia. It trades about 0.02 of its potential returns per unit of risk. Bank Islam Malaysia is currently generating about -0.05 per unit of risk. If you would invest 6.45 in Astar on October 18, 2024 and sell it today you would lose (0.19) from holding Astar or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.65% |
| Values | Daily Returns |
Astar vs. Bank Islam Malaysia
Performance |
| Timeline |
| Astar |
| Bank Islam Malaysia |
Astar and Bank Islam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Bank Islam
The main advantage of trading using opposite Astar and Bank Islam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Bank Islam 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 Bank Islam will offset losses from the drop in Bank Islam's long position.The idea behind Astar and Bank Islam Malaysia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bank Islam vs. Malayan Banking Bhd | Bank Islam vs. Public Bank Bhd | Bank Islam vs. Petronas Chemicals Group | Bank Islam vs. Tenaga Nasional 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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