Correlation Between Malayan Banking and National Bank
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and National Bank 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 Malayan Banking and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Berhad and National Bank of, you can compare the effects of market volatilities on Malayan Banking and National Bank 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 Malayan Banking with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and National Bank.
Diversification Opportunities for Malayan Banking and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Malayan and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Berhad and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Malayan Banking 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 Malayan Banking Berhad are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Malayan Banking i.e., Malayan Banking and National Bank go up and down completely randomly.
Pair Corralation between Malayan Banking and National Bank
Assuming the 90 days horizon Malayan Banking is expected to generate 2.17 times less return on investment than National Bank. But when comparing it to its historical volatility, Malayan Banking Berhad is 6.47 times less risky than National Bank. It trades about 0.11 of its potential returns per unit of risk. National Bank of is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 717.00 in National Bank of on October 22, 2024 and sell it today you would earn a total of 123.00 from holding National Bank of or generate 17.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 60.79% |
| Values | Daily Returns |
Malayan Banking Berhad vs. National Bank of
Performance |
| Timeline |
| Malayan Banking Berhad |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| National Bank |
Malayan Banking and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and National Bank
The main advantage of trading using opposite Malayan Banking and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.The idea behind Malayan Banking Berhad and National Bank of 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.| National Bank vs. Alpha Bank SA | National Bank vs. Eurobank Ergasias SA | National Bank vs. Piraeus Bank SA | National Bank vs. PT Bank Central |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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