Correlation Between Daya Materials and FGV Holdings

Can any of the company-specific risk be diversified away by investing in both Daya Materials and FGV Holdings 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 Daya Materials and FGV Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daya Materials Bhd and FGV Holdings Bhd, you can compare the effects of market volatilities on Daya Materials and FGV Holdings 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 Daya Materials with a short position of FGV Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daya Materials and FGV Holdings.

Diversification Opportunities for Daya Materials and FGV Holdings

-0.47

Correlation Coefficient

Daya Materials  FGV Holdings

Very good diversification

The 3 months correlation between Daya and FGV is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Daya Materials Bhd and FGV Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FGV Holdings Bhd and Daya Materials 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 Daya Materials Bhd are associated (or correlated) with FGV Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FGV Holdings Bhd has no effect on the direction of Daya Materials i.e., Daya Materials and FGV Holdings go up and down completely randomly.

Pair Corralation between Daya Materials and FGV Holdings

Assuming the 90 days trading horizon Daya Materials Bhd is expected to generate 5.19 times more return on investment than FGV Holdings. However, Daya Materials is 5.19 times more volatile than FGV Holdings Bhd. It trades about 0.04 of its potential returns per unit of risk. FGV Holdings Bhd is currently generating about 0.04 per unit of risk. If you would invest  11.00  in Daya Materials Bhd on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Daya Materials Bhd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Daya Materials Bhd  vs.  FGV Holdings Bhd

Daya Materials Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daya Materials Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Daya Materials disclosed solid returns over the last few months and may actually be approaching a breakup point.

FGV Holdings Bhd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FGV Holdings Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, FGV Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Daya Materials and FGV Holdings

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

The idea behind Daya Materials Bhd and FGV Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.