Correlation Between Nexgram Holdings and Sunway Construction

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

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

Diversification Opportunities for Nexgram Holdings and Sunway Construction

-0.05

Correlation Coefficient

Nexgram Holdings  Sunway Construction

Good diversification

The 3 months correlation between Nexgram and Sunway is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nexgram Holdings Bhd and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction and Nexgram Holdings 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 Nexgram Holdings Bhd are associated (or correlated) with Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of Nexgram Holdings i.e., Nexgram Holdings and Sunway Construction go up and down completely randomly.

Pair Corralation between Nexgram Holdings and Sunway Construction

Assuming the 90 days trading horizon Nexgram Holdings Bhd is expected to generate 5.51 times more return on investment than Sunway Construction. However, Nexgram Holdings is 5.51 times more volatile than Sunway Construction Group. It trades about 0.06 of its potential returns per unit of risk. Sunway Construction Group is currently generating about 0.07 per unit of risk. If you would invest  2.00  in Nexgram Holdings Bhd on September 27, 2024 and sell it today you would lose (0.50) from holding Nexgram Holdings Bhd or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Nexgram Holdings Bhd  vs.  Sunway Construction Group

Nexgram Holdings Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexgram Holdings Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Nexgram Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sunway Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunway Construction Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sunway Construction 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 Nexgram Holdings and Sunway Construction

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

The idea behind Nexgram Holdings Bhd and Sunway Construction Group 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.