Correlation Between ES Ceramics and Media Prima

Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Media Prima 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 Media Prima 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 Media Prima Bhd, you can compare the effects of market volatilities on ES Ceramics and Media Prima 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 Media Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Media Prima.

Diversification Opportunities for ES Ceramics and Media Prima

-0.42

Correlation Coefficient

ES Ceramics  Media Prima

Very good diversification

The 3 months correlation between 0100 and Media is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Media Prima Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Prima Bhd 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 Media Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Prima Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and Media Prima go up and down completely randomly.

Pair Corralation between ES Ceramics and Media Prima

Assuming the 90 days trading horizon ES Ceramics Technology is expected to generate 4.35 times more return on investment than Media Prima. However, ES Ceramics is 4.35 times more volatile than Media Prima Bhd. It trades about 0.02 of its potential returns per unit of risk. Media Prima Bhd is currently generating about 0.04 per unit of risk. If you would invest  14.00  in ES Ceramics Technology on October 25, 2024 and sell it today you would earn a total of  0.00  from holding ES Ceramics Technology or generate 0.0% return on investment over 90 days.

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

ES Ceramics Technology  vs.  Media Prima Bhd

ES Ceramics Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, ES Ceramics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Media Prima Bhd

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Media Prima Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Media Prima 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 ES Ceramics and Media Prima

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

The idea behind ES Ceramics Technology and Media Prima 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.