Correlation Between Senheng New and Supercomnet Technologies

Can any of the company-specific risk be diversified away by investing in both Senheng New and Supercomnet Technologies 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 Senheng New and Supercomnet Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Senheng New Retail and Supercomnet Technologies Bhd, you can compare the effects of market volatilities on Senheng New and Supercomnet Technologies 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 Senheng New with a short position of Supercomnet Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senheng New and Supercomnet Technologies.

Diversification Opportunities for Senheng New and Supercomnet Technologies

0.57

Correlation Coefficient

Senheng New  Supercomnet Technologies

Very weak diversification

The 3 months correlation between Senheng and Supercomnet is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Senheng New Retail and Supercomnet Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercomnet Technologies and Senheng New 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 Senheng New Retail are associated (or correlated) with Supercomnet Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercomnet Technologies has no effect on the direction of Senheng New i.e., Senheng New and Supercomnet Technologies go up and down completely randomly.

Pair Corralation between Senheng New and Supercomnet Technologies

Assuming the 90 days trading horizon Senheng New Retail is expected to generate 1.43 times more return on investment than Supercomnet Technologies. However, Senheng New is 1.43 times more volatile than Supercomnet Technologies Bhd. It trades about 0.12 of its potential returns per unit of risk. Supercomnet Technologies Bhd is currently generating about 0.02 per unit of risk. If you would invest  24.00  in Senheng New Retail on October 9, 2024 and sell it today you would earn a total of  4.00  from holding Senheng New Retail or generate 16.67% return on investment over 90 days.

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

Senheng New Retail  vs.  Supercomnet Technologies Bhd

Senheng New Retail

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senheng New Retail are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Senheng New disclosed solid returns over the last few months and may actually be approaching a breakup point.

Supercomnet Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Supercomnet Technologies Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Supercomnet Technologies is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Senheng New and Supercomnet Technologies

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

The idea behind Senheng New Retail and Supercomnet Technologies 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.