Correlation Between Steel Hawk and Resintech Bhd

Can any of the company-specific risk be diversified away by investing in both Steel Hawk and Resintech Bhd 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 Steel Hawk and Resintech Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Steel Hawk and Resintech Bhd

0.41

Correlation Coefficient

Steel Hawk  Resintech Bhd

Very weak diversification

The 3 months correlation between Steel and Resintech is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Hawk Berhad and Resintech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resintech Bhd and Steel Hawk 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 Steel Hawk Berhad are associated (or correlated) with Resintech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resintech Bhd has no effect on the direction of Steel Hawk i.e., Steel Hawk and Resintech Bhd go up and down completely randomly.

Pair Corralation between Steel Hawk and Resintech Bhd

Assuming the 90 days trading horizon Steel Hawk Berhad is expected to generate 1.13 times more return on investment than Resintech Bhd. However, Steel Hawk is 1.13 times more volatile than Resintech Bhd. It trades about 0.03 of its potential returns per unit of risk. Resintech Bhd is currently generating about -0.18 per unit of risk. If you would invest  45.00  in Steel Hawk Berhad on December 24, 2024 and sell it today you would earn a total of  1.00  from holding Steel Hawk Berhad or generate 2.22% return on investment over 90 days.

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

Steel Hawk Berhad  vs.  Resintech Bhd

Steel Hawk Berhad

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Hawk Berhad are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Steel Hawk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Resintech Bhd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Steel Hawk and Resintech Bhd

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

The idea behind Steel Hawk Berhad and Resintech 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.