Correlation Between Eversafe Rubber and Tenaga Nasional

Can any of the company-specific risk be diversified away by investing in both Eversafe Rubber and Tenaga Nasional 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 Eversafe Rubber and Tenaga Nasional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eversafe Rubber Bhd and Tenaga Nasional Bhd, you can compare the effects of market volatilities on Eversafe Rubber and Tenaga Nasional 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 Eversafe Rubber with a short position of Tenaga Nasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversafe Rubber and Tenaga Nasional.

Diversification Opportunities for Eversafe Rubber and Tenaga Nasional

0.19

Correlation Coefficient

Eversafe Rubber  Tenaga Nasional

Average diversification

The 3 months correlation between Eversafe and Tenaga is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eversafe Rubber Bhd and Tenaga Nasional Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaga Nasional Bhd and Eversafe Rubber 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 Eversafe Rubber Bhd are associated (or correlated) with Tenaga Nasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaga Nasional Bhd has no effect on the direction of Eversafe Rubber i.e., Eversafe Rubber and Tenaga Nasional go up and down completely randomly.

Pair Corralation between Eversafe Rubber and Tenaga Nasional

Assuming the 90 days trading horizon Eversafe Rubber Bhd is expected to under-perform the Tenaga Nasional. In addition to that, Eversafe Rubber is 3.93 times more volatile than Tenaga Nasional Bhd. It trades about -0.08 of its total potential returns per unit of risk. Tenaga Nasional Bhd is currently generating about 0.0 per unit of volatility. If you would invest  1,438  in Tenaga Nasional Bhd on October 10, 2024 and sell it today you would lose (6.00) from holding Tenaga Nasional Bhd or give up 0.42% of portfolio value over 90 days.

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

Eversafe Rubber Bhd  vs.  Tenaga Nasional Bhd

Eversafe Rubber Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eversafe Rubber 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tenaga Nasional Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenaga Nasional Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tenaga Nasional 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 Eversafe Rubber and Tenaga Nasional

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

The idea behind Eversafe Rubber Bhd and Tenaga Nasional 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.