Correlation Between Genting Plantations and Mycron Steel

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

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

Diversification Opportunities for Genting Plantations and Mycron Steel

0.54

Correlation Coefficient

Genting Plantations  Mycron Steel

Very weak diversification

The 3 months correlation between Genting and Mycron is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Genting Plantations Bhd and Mycron Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mycron Steel Bhd and Genting Plantations 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 Genting Plantations Bhd are associated (or correlated) with Mycron Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mycron Steel Bhd has no effect on the direction of Genting Plantations i.e., Genting Plantations and Mycron Steel go up and down completely randomly.

Pair Corralation between Genting Plantations and Mycron Steel

Assuming the 90 days trading horizon Genting Plantations Bhd is expected to generate 0.18 times more return on investment than Mycron Steel. However, Genting Plantations Bhd is 5.58 times less risky than Mycron Steel. It trades about -0.11 of its potential returns per unit of risk. Mycron Steel Bhd is currently generating about -0.03 per unit of risk. If you would invest  566.00  in Genting Plantations Bhd on December 25, 2024 and sell it today you would lose (46.00) from holding Genting Plantations Bhd or give up 8.13% of portfolio value over 90 days.

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

Genting Plantations Bhd  vs.  Mycron Steel Bhd

Genting Plantations Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genting Plantations Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Mycron Steel Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mycron Steel 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 Genting Plantations and Mycron Steel

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

The idea behind Genting Plantations Bhd and Mycron Steel 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.