Correlation Between MISC Bhd and Gamuda Bhd

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

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

Diversification Opportunities for MISC Bhd and Gamuda Bhd

-0.37

Correlation Coefficient

MISC Bhd  Gamuda Bhd

Very good diversification

The 3 months correlation between MISC and Gamuda is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding MISC Bhd and Gamuda Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamuda Bhd and MISC 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 MISC Bhd are associated (or correlated) with Gamuda Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamuda Bhd has no effect on the direction of MISC Bhd i.e., MISC Bhd and Gamuda Bhd go up and down completely randomly.

Pair Corralation between MISC Bhd and Gamuda Bhd

Assuming the 90 days trading horizon MISC Bhd is expected to under-perform the Gamuda Bhd. But the stock apears to be less risky and, when comparing its historical volatility, MISC Bhd is 1.83 times less risky than Gamuda Bhd. The stock trades about -0.1 of its potential returns per unit of risk. The Gamuda Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Gamuda Bhd on October 20, 2024 and sell it today you would earn a total of  14.00  from holding Gamuda Bhd or generate 3.41% return on investment over 90 days.

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

MISC Bhd  vs.  Gamuda Bhd

MISC Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MISC 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.

Gamuda Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gamuda Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Gamuda 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 MISC Bhd and Gamuda Bhd

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

The idea behind MISC Bhd and Gamuda 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..