Correlation Between Tambun Indah and Daya Materials

Can any of the company-specific risk be diversified away by investing in both Tambun Indah and Daya Materials 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 Tambun Indah and Daya Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tambun Indah and Daya Materials

0.4

Correlation Coefficient

Tambun Indah  Daya Materials

Very weak diversification

The 3 months correlation between Tambun and Daya is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tambun Indah Land and Daya Materials Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daya Materials Bhd and Tambun Indah 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 Tambun Indah Land are associated (or correlated) with Daya Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daya Materials Bhd has no effect on the direction of Tambun Indah i.e., Tambun Indah and Daya Materials go up and down completely randomly.

Pair Corralation between Tambun Indah and Daya Materials

Assuming the 90 days trading horizon Tambun Indah Land is expected to generate 0.57 times more return on investment than Daya Materials. However, Tambun Indah Land is 1.75 times less risky than Daya Materials. It trades about 0.02 of its potential returns per unit of risk. Daya Materials Bhd is currently generating about -0.02 per unit of risk. If you would invest  80.00  in Tambun Indah Land on October 9, 2024 and sell it today you would earn a total of  11.00  from holding Tambun Indah Land or generate 13.75% return on investment over 90 days.

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

Tambun Indah Land  vs.  Daya Materials Bhd

Tambun Indah Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Daya Materials Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daya Materials Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tambun Indah and Daya Materials

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

The idea behind Tambun Indah Land and Daya Materials 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.