Correlation Between Insas Bhd and Telekom Malaysia

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

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

Diversification Opportunities for Insas Bhd and Telekom Malaysia

-0.44

Correlation Coefficient

Insas Bhd  Telekom Malaysia

Very good diversification

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

Pair Corralation between Insas Bhd and Telekom Malaysia

Assuming the 90 days trading horizon Insas Bhd is expected to generate 1.8 times less return on investment than Telekom Malaysia. In addition to that, Insas Bhd is 1.61 times more volatile than Telekom Malaysia Bhd. It trades about 0.03 of its total potential returns per unit of risk. Telekom Malaysia Bhd is currently generating about 0.08 per unit of volatility. If you would invest  453.00  in Telekom Malaysia Bhd on December 2, 2024 and sell it today you would earn a total of  230.00  from holding Telekom Malaysia Bhd or generate 50.77% return on investment over 90 days.

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

Insas Bhd  vs.  Telekom Malaysia 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.

Telekom Malaysia Bhd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telekom Malaysia Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Telekom Malaysia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Insas Bhd and Telekom Malaysia

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

The idea behind Insas Bhd and Telekom Malaysia 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..