Correlation Between Sime Darby and PPB Group
Can any of the company-specific risk be diversified away by investing in both Sime Darby and PPB Group 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 Sime Darby and PPB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sime Darby Plantation and PPB Group Bhd, you can compare the effects of market volatilities on Sime Darby and PPB Group 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 Sime Darby with a short position of PPB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sime Darby and PPB Group.
Diversification Opportunities for Sime Darby and PPB Group
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sime and PPB is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Plantation and PPB Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPB Group Bhd and Sime Darby 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 Sime Darby Plantation are associated (or correlated) with PPB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPB Group Bhd has no effect on the direction of Sime Darby i.e., Sime Darby and PPB Group go up and down completely randomly.
Pair Corralation between Sime Darby and PPB Group
Assuming the 90 days trading horizon Sime Darby Plantation is expected to under-perform the PPB Group. In addition to that, Sime Darby is 1.21 times more volatile than PPB Group Bhd. It trades about -0.03 of its total potential returns per unit of risk. PPB Group Bhd is currently generating about -0.01 per unit of volatility. If you would invest 1,224 in PPB Group Bhd on October 15, 2024 and sell it today you would lose (4.00) from holding PPB Group Bhd or give up 0.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sime Darby Plantation vs. PPB Group Bhd
Performance |
Timeline |
Sime Darby Plantation |
PPB Group Bhd |
Sime Darby and PPB Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sime Darby and PPB Group
The main advantage of trading using opposite Sime Darby and PPB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sime Darby position performs unexpectedly, PPB Group 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 PPB Group will offset losses from the drop in PPB Group's long position.Sime Darby vs. Kluang Rubber | Sime Darby vs. Icon Offshore Bhd | Sime Darby vs. IHH Healthcare Bhd | Sime Darby vs. Impiana Hotels Bhd |
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Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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