Correlation Between MClean Technologies and Senheng New

Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Senheng New 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 MClean Technologies and Senheng New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MClean Technologies Bhd and Senheng New Retail, you can compare the effects of market volatilities on MClean Technologies and Senheng New 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 MClean Technologies with a short position of Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and Senheng New.

Diversification Opportunities for MClean Technologies and Senheng New

0.63

Correlation Coefficient

MClean Technologies  Senheng New

Poor diversification

The 3 months correlation between MClean and Senheng is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of MClean Technologies i.e., MClean Technologies and Senheng New go up and down completely randomly.

Pair Corralation between MClean Technologies and Senheng New

Assuming the 90 days trading horizon MClean Technologies is expected to generate 1.01 times less return on investment than Senheng New. In addition to that, MClean Technologies is 2.45 times more volatile than Senheng New Retail. It trades about 0.08 of its total potential returns per unit of risk. Senheng New Retail is currently generating about 0.19 per unit of volatility. If you would invest  24.00  in Senheng New Retail on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Senheng New Retail or generate 16.67% return on investment over 90 days.

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

MClean Technologies Bhd  vs.  Senheng New Retail

MClean Technologies Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MClean Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Senheng New Retail

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senheng New Retail are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Senheng New disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MClean Technologies and Senheng New

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

The idea behind MClean Technologies Bhd and Senheng New Retail 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.