Correlation Between Mazda and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Mazda and Sime Darby 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 Mazda and Sime Darby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor Corp and Sime Darby Bhd, you can compare the effects of market volatilities on Mazda and Sime Darby 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 Mazda with a short position of Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Sime Darby.
Diversification Opportunities for Mazda and Sime Darby
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mazda and Sime is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor Corp and Sime Darby Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Bhd and Mazda 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 Mazda Motor Corp are associated (or correlated) with Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Bhd has no effect on the direction of Mazda i.e., Mazda and Sime Darby go up and down completely randomly.
Pair Corralation between Mazda and Sime Darby
If you would invest 51.00 in Sime Darby Bhd on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Sime Darby Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Mazda Motor Corp vs. Sime Darby Bhd
Performance |
| Timeline |
| Mazda Motor Corp |
| Sime Darby Bhd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mazda and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mazda and Sime Darby
The main advantage of trading using opposite Mazda and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Mazda vs. Isuzu Motors | Mazda vs. Renault SA | Mazda vs. Toyota Motor Corp | Mazda vs. Porsche Automobile Holding |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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