Correlation Between Malayan Banking and Teo Seng

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

Diversification Opportunities for Malayan Banking and Teo Seng

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Malayan and Teo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Teo Seng Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teo Seng Capital 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 Teo Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teo Seng Capital has no effect on the direction of Malayan Banking i.e., Malayan Banking and Teo Seng go up and down completely randomly.

Pair Corralation between Malayan Banking and Teo Seng

Assuming the 90 days trading horizon Malayan Banking is expected to generate 4.88 times less return on investment than Teo Seng. But when comparing it to its historical volatility, Malayan Banking Bhd is 4.29 times less risky than Teo Seng. It trades about 0.1 of its potential returns per unit of risk. Teo Seng Capital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Teo Seng Capital on October 4, 2024 and sell it today you would earn a total of  77.00  from holding Teo Seng Capital or generate 233.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.79%
ValuesDaily Returns

Malayan Banking Bhd  vs.  Teo Seng Capital

 Performance 
       Timeline  
Malayan Banking Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Malayan Banking Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
Teo Seng Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Teo Seng Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Teo Seng is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Malayan Banking and Teo Seng Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Malayan Banking and Teo Seng

The main advantage of trading using opposite Malayan Banking and Teo Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Teo Seng 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 Teo Seng will offset losses from the drop in Teo Seng's long position.
The idea behind Malayan Banking Bhd and Teo Seng Capital 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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