Correlation Between Dagang Nexchange and TechnoDex Bhd

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

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

Diversification Opportunities for Dagang Nexchange and TechnoDex Bhd

-0.69

Correlation Coefficient

Dagang Nexchange  TechnoDex Bhd

Excellent diversification

The 3 months correlation between Dagang and TechnoDex is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dagang Nexchange Bhd and TechnoDex Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnoDex Bhd and Dagang Nexchange 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 Dagang Nexchange Bhd are associated (or correlated) with TechnoDex Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnoDex Bhd has no effect on the direction of Dagang Nexchange i.e., Dagang Nexchange and TechnoDex Bhd go up and down completely randomly.

Pair Corralation between Dagang Nexchange and TechnoDex Bhd

Assuming the 90 days trading horizon Dagang Nexchange Bhd is expected to under-perform the TechnoDex Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Dagang Nexchange Bhd is 1.8 times less risky than TechnoDex Bhd. The stock trades about -0.02 of its potential returns per unit of risk. The TechnoDex Bhd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10.00  in TechnoDex Bhd on October 14, 2024 and sell it today you would lose (5.00) from holding TechnoDex Bhd or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Dagang Nexchange Bhd  vs.  TechnoDex Bhd

Dagang Nexchange Bhd

Risk-Adjusted Performance

6 of 100

Modest

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

TechnoDex Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Dagang Nexchange Bhd and TechnoDex 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.