Correlation Between Malaysia Steel and Genetec Technology

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

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

Diversification Opportunities for Malaysia Steel and Genetec Technology

0.61

Correlation Coefficient

Malaysia Steel  Genetec Technology

Poor diversification

The 3 months correlation between Malaysia and Genetec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Malaysia Steel Works and Genetec Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genetec Technology Bhd and Malaysia Steel 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 Malaysia Steel Works are associated (or correlated) with Genetec Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genetec Technology Bhd has no effect on the direction of Malaysia Steel i.e., Malaysia Steel and Genetec Technology go up and down completely randomly.

Pair Corralation between Malaysia Steel and Genetec Technology

Assuming the 90 days trading horizon Malaysia Steel Works is expected to under-perform the Genetec Technology. But the stock apears to be less risky and, when comparing its historical volatility, Malaysia Steel Works is 1.65 times less risky than Genetec Technology. The stock trades about -0.13 of its potential returns per unit of risk. The Genetec Technology Bhd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Genetec Technology Bhd on December 27, 2024 and sell it today you would lose (11.00) from holding Genetec Technology Bhd or give up 8.27% of portfolio value over 90 days.

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

Malaysia Steel Works  vs.  Genetec Technology Bhd

Malaysia Steel Works

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malaysia Steel Works has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Genetec Technology Bhd

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Malaysia Steel Works and Genetec Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.