Correlation Between Silver Ridge and Binasat Communications

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

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

Diversification Opportunities for Silver Ridge and Binasat Communications

0.03

Correlation Coefficient

Silver Ridge  Binasat Communications

Significant diversification

The 3 months correlation between Silver and Binasat is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Silver Ridge Holdings and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and Silver Ridge 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 Silver Ridge Holdings 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 Silver Ridge i.e., Silver Ridge and Binasat Communications go up and down completely randomly.

Pair Corralation between Silver Ridge and Binasat Communications

Assuming the 90 days trading horizon Silver Ridge Holdings is expected to under-perform the Binasat Communications. In addition to that, Silver Ridge is 2.94 times more volatile than Binasat Communications Bhd. It trades about -0.16 of its total potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.21 per unit of volatility. If you would invest  21.00  in Binasat Communications Bhd on September 22, 2024 and sell it today you would lose (2.00) from holding Binasat Communications Bhd or give up 9.52% of portfolio value over 90 days.

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

Silver Ridge Holdings  vs.  Binasat Communications Bhd

Silver Ridge Holdings

Risk-Adjusted Performance

6 of 100

Modest

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

Binasat Communications

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Silver Ridge and Binasat Communications

The main advantage of trading using opposite Silver Ridge and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Ridge 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 Silver Ridge Holdings 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.