Correlation Between Malayan Banking and Sunway Construction

Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Sunway Construction 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 Sunway Construction 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 Sunway Construction Group, you can compare the effects of market volatilities on Malayan Banking and Sunway Construction 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 Sunway Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Sunway Construction.

Diversification Opportunities for Malayan Banking and Sunway Construction

-0.15

Correlation Coefficient

Malayan Banking  Sunway Construction

Good diversification

The 3 months correlation between Malayan and Sunway is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction 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 Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of Malayan Banking i.e., Malayan Banking and Sunway Construction go up and down completely randomly.

Pair Corralation between Malayan Banking and Sunway Construction

Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.21 times more return on investment than Sunway Construction. However, Malayan Banking Bhd is 4.84 times less risky than Sunway Construction. It trades about 0.1 of its potential returns per unit of risk. Sunway Construction Group is currently generating about 0.0 per unit of risk. If you would invest  977.00  in Malayan Banking Bhd on December 23, 2024 and sell it today you would earn a total of  41.00  from holding Malayan Banking Bhd or generate 4.2% return on investment over 90 days.

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

Malayan Banking Bhd  vs.  Sunway Construction Group

Malayan Banking Bhd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malayan Banking Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Malayan Banking is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sunway Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunway Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunway Construction 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 Malayan Banking and Sunway Construction

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

The idea behind Malayan Banking Bhd and Sunway Construction Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..