Correlation Between MI Technovation and SSF Home

Can any of the company-specific risk be diversified away by investing in both MI Technovation and SSF Home 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 SSF Home 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 SSF Home Group, you can compare the effects of market volatilities on MI Technovation and SSF Home 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 SSF Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Technovation and SSF Home.

Diversification Opportunities for MI Technovation and SSF Home

0.5

Correlation Coefficient

MI Technovation  SSF Home

Very weak diversification

The 3 months correlation between 5286 and SSF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MI Technovation Bhd and SSF Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSF Home Group 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 SSF Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSF Home Group has no effect on the direction of MI Technovation i.e., MI Technovation and SSF Home go up and down completely randomly.

Pair Corralation between MI Technovation and SSF Home

Assuming the 90 days trading horizon MI Technovation Bhd is expected to generate 1.69 times more return on investment than SSF Home. However, MI Technovation is 1.69 times more volatile than SSF Home Group. It trades about 0.13 of its potential returns per unit of risk. SSF Home Group is currently generating about 0.07 per unit of risk. If you would invest  181.00  in MI Technovation Bhd on October 27, 2024 and sell it today you would earn a total of  37.00  from holding MI Technovation Bhd or generate 20.44% return on investment over 90 days.

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

MI Technovation Bhd  vs.  SSF Home Group

MI Technovation Bhd

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 10 (%) 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.

SSF Home Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSF Home Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SSF Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MI Technovation and SSF Home

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

The idea behind MI Technovation Bhd and SSF Home 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.