Correlation Between Insas Bhd and ViTrox Bhd

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

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

Diversification Opportunities for Insas Bhd and ViTrox Bhd

0.44

Correlation Coefficient

Insas Bhd  ViTrox Bhd

Very weak diversification

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

Pair Corralation between Insas Bhd and ViTrox Bhd

Assuming the 90 days trading horizon Insas Bhd is expected to under-perform the ViTrox Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Insas Bhd is 3.46 times less risky than ViTrox Bhd. The stock trades about -0.1 of its potential returns per unit of risk. The ViTrox Bhd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  333.00  in ViTrox Bhd on December 1, 2024 and sell it today you would lose (23.00) from holding ViTrox Bhd or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Insas Bhd  vs.  ViTrox Bhd

Insas Bhd

Risk-Adjusted Performance

Very Weak

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

ViTrox Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days ViTrox Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ViTrox Bhd 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 Insas Bhd and ViTrox Bhd

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

The idea behind Insas Bhd and ViTrox 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.