Correlation Between Malayan Banking and ECS ICT
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and ECS ICT 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 Malayan Banking and ECS ICT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and ECS ICT Bhd, you can compare the effects of market volatilities on Malayan Banking and ECS ICT 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 Malayan Banking with a short position of ECS ICT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and ECS ICT.
Diversification Opportunities for Malayan Banking and ECS ICT
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Malayan and ECS is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and ECS ICT Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS ICT Bhd and Malayan Banking 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 Malayan Banking Bhd are associated (or correlated) with ECS ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS ICT Bhd has no effect on the direction of Malayan Banking i.e., Malayan Banking and ECS ICT go up and down completely randomly.
Pair Corralation between Malayan Banking and ECS ICT
Assuming the 90 days trading horizon Malayan Banking is expected to generate 5.1 times less return on investment than ECS ICT. But when comparing it to its historical volatility, Malayan Banking Bhd is 4.38 times less risky than ECS ICT. It trades about 0.1 of its potential returns per unit of risk. ECS ICT Bhd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 111.00 in ECS ICT Bhd on September 25, 2024 and sell it today you would earn a total of 286.00 from holding ECS ICT Bhd or generate 257.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.79% |
Values | Daily Returns |
Malayan Banking Bhd vs. ECS ICT Bhd
Performance |
Timeline |
Malayan Banking Bhd |
ECS ICT Bhd |
Malayan Banking and ECS ICT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Malayan Banking and ECS ICT
The main advantage of trading using opposite Malayan Banking and ECS ICT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, ECS ICT 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 ECS ICT will offset losses from the drop in ECS ICT's long position.Malayan Banking vs. Press Metal Bhd | Malayan Banking vs. Melewar Industrial Group | Malayan Banking vs. Aeon Credit Service | Malayan Banking vs. ECM Libra Financial |
ECS ICT vs. Malayan Banking Bhd | ECS ICT vs. Public Bank Bhd | ECS ICT vs. Petronas Chemicals Group | ECS ICT vs. Tenaga Nasional Bhd |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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