Correlation Between ES Ceramics and Binasat Communications

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

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

Diversification Opportunities for ES Ceramics and Binasat Communications

0.78

Correlation Coefficient

ES Ceramics  Binasat Communications

Poor diversification

The 3 months correlation between 0100 and Binasat is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics 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 ES Ceramics 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 ES Ceramics 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 ES Ceramics i.e., ES Ceramics and Binasat Communications go up and down completely randomly.

Pair Corralation between ES Ceramics and Binasat Communications

Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Binasat Communications. In addition to that, ES Ceramics is 1.52 times more volatile than Binasat Communications Bhd. It trades about -0.12 of its total potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.08 per unit of volatility. If you would invest  19.00  in Binasat Communications Bhd on December 24, 2024 and sell it today you would lose (3.00) from holding Binasat Communications Bhd or give up 15.79% of portfolio value over 90 days.

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

ES Ceramics Technology  vs.  Binasat Communications Bhd

ES Ceramics Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days ES Ceramics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Binasat Communications

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with ES Ceramics and Binasat Communications

The main advantage of trading using opposite ES Ceramics and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics 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 ES Ceramics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.