Correlation Between Homeritz Bhd and Sunway Construction

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

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

Diversification Opportunities for Homeritz Bhd and Sunway Construction

-0.54

Correlation Coefficient

Homeritz Bhd  Sunway Construction

Excellent diversification

The 3 months correlation between Homeritz and Sunway is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Homeritz Bhd and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction and Homeritz 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 Homeritz Bhd are associated (or correlated) with Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of Homeritz Bhd i.e., Homeritz Bhd and Sunway Construction go up and down completely randomly.

Pair Corralation between Homeritz Bhd and Sunway Construction

Assuming the 90 days trading horizon Homeritz Bhd is expected to under-perform the Sunway Construction. But the stock apears to be less risky and, when comparing its historical volatility, Homeritz Bhd is 3.05 times less risky than Sunway Construction. The stock trades about -0.02 of its potential returns per unit of risk. The Sunway Construction Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Sunway Construction Group on December 25, 2024 and sell it today you would lose (20.00) from holding Sunway Construction Group or give up 4.33% of portfolio value over 90 days.

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

Homeritz Bhd  vs.  Sunway Construction Group

Homeritz Bhd

Risk-Adjusted Performance

Very Weak

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

Sunway Construction

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Homeritz Bhd and Sunway Construction Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.