Correlation Between ES Ceramics and MyTech Group

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

Diversification Opportunities for ES Ceramics and MyTech Group

-0.27

Correlation Coefficient

ES Ceramics  MyTech Group

Very good diversification

The 3 months correlation between 0100 and MyTech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and MyTech Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyTech Group 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 MyTech Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyTech Group Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and MyTech Group go up and down completely randomly.

Pair Corralation between ES Ceramics and MyTech Group

Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the MyTech Group. But the stock apears to be less risky and, when comparing its historical volatility, ES Ceramics Technology is 1.25 times less risky than MyTech Group. The stock trades about 0.0 of its potential returns per unit of risk. The MyTech Group Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  46.00  in MyTech Group Bhd on October 8, 2024 and sell it today you would lose (6.00) from holding MyTech Group Bhd or give up 13.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.65%
Values	Daily Returns

ES Ceramics Technology  vs.  MyTech Group Bhd

ES Ceramics Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ES Ceramics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MyTech Group Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MyTech Group Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MyTech Group 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 MyTech Group

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

The idea behind ES Ceramics Technology and MyTech Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.