Correlation Between Tambun Indah and Minetech Resources

Can any of the company-specific risk be diversified away by investing in both Tambun Indah and Minetech Resources 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 Minetech Resources 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 Minetech Resources Bhd, you can compare the effects of market volatilities on Tambun Indah and Minetech Resources 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 Minetech Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tambun Indah and Minetech Resources.

Diversification Opportunities for Tambun Indah and Minetech Resources

0.65

Correlation Coefficient

Tambun Indah  Minetech Resources

Poor diversification

The 3 months correlation between Tambun and Minetech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tambun Indah Land and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources 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 Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Tambun Indah i.e., Tambun Indah and Minetech Resources go up and down completely randomly.

Pair Corralation between Tambun Indah and Minetech Resources

Assuming the 90 days trading horizon Tambun Indah Land is expected to under-perform the Minetech Resources. But the stock apears to be less risky and, when comparing its historical volatility, Tambun Indah Land is 3.82 times less risky than Minetech Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Minetech Resources Bhd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Minetech Resources Bhd on December 25, 2024 and sell it today you would lose (2.00) from holding Minetech Resources Bhd or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Tambun Indah Land  vs.  Minetech Resources Bhd

Tambun Indah Land

Risk-Adjusted Performance

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 latest conflicting 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.

Minetech Resources Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minetech Resources Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Minetech Resources

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

The idea behind Tambun Indah Land and Minetech Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .