Correlation Between TAS Offshore and OpenSys M

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

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

Diversification Opportunities for TAS Offshore and OpenSys M

0.27

Correlation Coefficient

TAS Offshore  OpenSys M

Modest diversification

The 3 months correlation between TAS and OpenSys is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding TAS Offshore Bhd and OpenSys M Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OpenSys M Bhd and TAS Offshore 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 TAS Offshore Bhd are associated (or correlated) with OpenSys M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OpenSys M Bhd has no effect on the direction of TAS Offshore i.e., TAS Offshore and OpenSys M go up and down completely randomly.

Pair Corralation between TAS Offshore and OpenSys M

Assuming the 90 days trading horizon TAS Offshore Bhd is expected to generate 2.23 times more return on investment than OpenSys M. However, TAS Offshore is 2.23 times more volatile than OpenSys M Bhd. It trades about 0.08 of its potential returns per unit of risk. OpenSys M Bhd is currently generating about 0.02 per unit of risk. If you would invest  19.00  in TAS Offshore Bhd on October 9, 2024 and sell it today you would earn a total of  45.00  from holding TAS Offshore Bhd or generate 236.84% return on investment over 90 days.

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

TAS Offshore Bhd  vs.  OpenSys M Bhd

TAS Offshore Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

OpenSys M Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind TAS Offshore Bhd and OpenSys M 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.