Correlation Between NYSE Composite and Sime Darby
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Sime Darby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sime Darby Bhd, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sime Darby.
Diversification Opportunities for NYSE Composite and Sime Darby
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Sime is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Sime Darby go up and down completely randomly.
Pair Corralation between NYSE Composite and Sime Darby
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.92 times less return on investment than Sime Darby. But when comparing it to its historical volatility, NYSE Composite is 4.14 times less risky than Sime Darby. It trades about 0.08 of its potential returns per unit of risk. Sime Darby Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Sime Darby Bhd on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Sime Darby Bhd or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.45% |
| Values | Daily Returns |
NYSE Composite vs. Sime Darby Bhd
Performance |
| Timeline |
NYSE Composite and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sime Darby Bhd
Pair trading matchups for Sime Darby
Pair Trading with NYSE Composite and Sime Darby
The main advantage of trading using opposite NYSE Composite and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Sime Darby vs. Zapp Electric Vehicles | Sime Darby vs. First Hydrogen Corp | Sime Darby vs. Guangzhou Automobile Group | Sime Darby vs. Phoenix Motor Common |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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