Correlation Between MI Technovation and Daya Materials

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

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

Diversification Opportunities for MI Technovation and Daya Materials

-0.58

Correlation Coefficient

MI Technovation  Daya Materials

Excellent diversification

The 3 months correlation between 5286 and Daya is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding MI Technovation Bhd 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 MI Technovation 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 MI Technovation Bhd 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 MI Technovation i.e., MI Technovation and Daya Materials go up and down completely randomly.

Pair Corralation between MI Technovation and Daya Materials

Assuming the 90 days trading horizon MI Technovation Bhd is expected to generate 0.73 times more return on investment than Daya Materials. However, MI Technovation Bhd is 1.37 times less risky than Daya Materials. It trades about 0.05 of its potential returns per unit of risk. Daya Materials Bhd is currently generating about -0.01 per unit of risk. If you would invest  146.00  in MI Technovation Bhd on October 24, 2024 and sell it today you would earn a total of  78.00  from holding MI Technovation Bhd or generate 53.42% return on investment over 90 days.

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

MI Technovation Bhd  vs.  Daya Materials Bhd

MI Technovation Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Daya Materials Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daya Materials Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Daya Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MI Technovation and Daya Materials

The main advantage of trading using opposite MI Technovation and Daya Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Technovation 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 MI Technovation Bhd 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.