Correlation Between Sungei Bagan and Eco World

Can any of the company-specific risk be diversified away by investing in both Sungei Bagan and Eco World 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 Sungei Bagan and Eco World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sungei Bagan Rubber and Eco World Develop, you can compare the effects of market volatilities on Sungei Bagan and Eco World 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 Sungei Bagan with a short position of Eco World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungei Bagan and Eco World.

Diversification Opportunities for Sungei Bagan and Eco World

-0.44

Correlation Coefficient

Sungei Bagan  Eco World

Very good diversification

The 3 months correlation between Sungei and Eco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sungei Bagan Rubber and Eco World Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco World Develop and Sungei Bagan 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 Sungei Bagan Rubber are associated (or correlated) with Eco World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco World Develop has no effect on the direction of Sungei Bagan i.e., Sungei Bagan and Eco World go up and down completely randomly.

Pair Corralation between Sungei Bagan and Eco World

Assuming the 90 days trading horizon Sungei Bagan Rubber is expected to generate 0.32 times more return on investment than Eco World. However, Sungei Bagan Rubber is 3.14 times less risky than Eco World. It trades about 0.18 of its potential returns per unit of risk. Eco World Develop is currently generating about -0.01 per unit of risk. If you would invest  528.00  in Sungei Bagan Rubber on December 23, 2024 and sell it today you would earn a total of  52.00  from holding Sungei Bagan Rubber or generate 9.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Sungei Bagan Rubber  vs.  Eco World Develop

Sungei Bagan Rubber

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sungei Bagan Rubber are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sungei Bagan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eco World Develop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco World Develop has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Eco World 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 Sungei Bagan and Eco World

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

The idea behind Sungei Bagan Rubber and Eco World Develop 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.