Correlation Between Media Prima and Shangri La

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

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

Diversification Opportunities for Media Prima and Shangri La

0.02

Correlation Coefficient

Media Prima  Shangri La

Significant diversification

The 3 months correlation between Media and Shangri is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Media Prima Bhd and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels and Media Prima 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 Media Prima Bhd are associated (or correlated) with Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Media Prima i.e., Media Prima and Shangri La go up and down completely randomly.

Pair Corralation between Media Prima and Shangri La

Assuming the 90 days trading horizon Media Prima Bhd is expected to generate 1.35 times more return on investment than Shangri La. However, Media Prima is 1.35 times more volatile than Shangri La Hotels. It trades about 0.02 of its potential returns per unit of risk. Shangri La Hotels is currently generating about -0.04 per unit of risk. If you would invest  43.00  in Media Prima Bhd on October 24, 2024 and sell it today you would earn a total of  5.00  from holding Media Prima Bhd or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

Media Prima Bhd  vs.  Shangri La Hotels

Media Prima Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shangri La Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shangri La Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shangri La 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 Media Prima and Shangri La

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

The idea behind Media Prima Bhd and Shangri La Hotels 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.