Correlation Between Public Bank and MClean Technologies

Can any of the company-specific risk be diversified away by investing in both Public Bank and MClean Technologies 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 Public Bank and MClean Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Public Bank and MClean Technologies

0.25

Correlation Coefficient

Public Bank  MClean Technologies

Modest diversification

The 3 months correlation between Public and MClean is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and MClean Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MClean Technologies Bhd and Public Bank 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 Public Bank Bhd are associated (or correlated) with MClean Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MClean Technologies Bhd has no effect on the direction of Public Bank i.e., Public Bank and MClean Technologies go up and down completely randomly.

Pair Corralation between Public Bank and MClean Technologies

Assuming the 90 days trading horizon Public Bank is expected to generate 4.75 times less return on investment than MClean Technologies. But when comparing it to its historical volatility, Public Bank Bhd is 3.27 times less risky than MClean Technologies. It trades about 0.02 of its potential returns per unit of risk. MClean Technologies Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  29.00  in MClean Technologies Bhd on December 24, 2024 and sell it today you would earn a total of  1.00  from holding MClean Technologies Bhd or generate 3.45% return on investment over 90 days.

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

Public Bank Bhd  vs.  MClean Technologies Bhd

Public Bank Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Public Bank Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Public Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MClean Technologies Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MClean Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Public Bank and MClean Technologies

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

The idea behind Public Bank Bhd and MClean Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.