Correlation Between Tex Cycle and Binasat Communications

Can any of the company-specific risk be diversified away by investing in both Tex Cycle and Binasat Communications 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 Tex Cycle and Binasat Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tex Cycle Technology and Binasat Communications Bhd, you can compare the effects of market volatilities on Tex Cycle and Binasat Communications 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 Tex Cycle with a short position of Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Cycle and Binasat Communications.

Diversification Opportunities for Tex Cycle and Binasat Communications

-0.12

Correlation Coefficient

Tex Cycle  Binasat Communications

Good diversification

The 3 months correlation between Tex and Binasat is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tex Cycle Technology and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and Tex Cycle 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 Tex Cycle Technology are associated (or correlated) with Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Tex Cycle i.e., Tex Cycle and Binasat Communications go up and down completely randomly.

Pair Corralation between Tex Cycle and Binasat Communications

Assuming the 90 days trading horizon Tex Cycle Technology is expected to generate 0.83 times more return on investment than Binasat Communications. However, Tex Cycle Technology is 1.21 times less risky than Binasat Communications. It trades about 0.21 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.16 per unit of risk. If you would invest  103.00  in Tex Cycle Technology on September 27, 2024 and sell it today you would earn a total of  10.00  from holding Tex Cycle Technology or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tex Cycle Technology  vs.  Binasat Communications Bhd

Tex Cycle Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tex Cycle Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tex Cycle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Binasat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binasat Communications Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tex Cycle and Binasat Communications

The main advantage of trading using opposite Tex Cycle and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Cycle position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.

The idea behind Tex Cycle Technology and Binasat Communications Bhd 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.