Correlation Between Tenaga Nasional and Genting Plantations

Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and Genting Plantations 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 Tenaga Nasional and Genting Plantations into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tenaga Nasional and Genting Plantations

-0.21

Correlation Coefficient

Tenaga Nasional  Genting Plantations

Very good diversification

The 3 months correlation between Tenaga and Genting is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and Genting Plantations Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genting Plantations Bhd and Tenaga Nasional 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 Tenaga Nasional Bhd are associated (or correlated) with Genting Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genting Plantations Bhd has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and Genting Plantations go up and down completely randomly.

Pair Corralation between Tenaga Nasional and Genting Plantations

Assuming the 90 days trading horizon Tenaga Nasional Bhd is expected to under-perform the Genting Plantations. In addition to that, Tenaga Nasional is 1.16 times more volatile than Genting Plantations Bhd. It trades about -0.04 of its total potential returns per unit of risk. Genting Plantations Bhd is currently generating about 0.09 per unit of volatility. If you would invest  543.00  in Genting Plantations Bhd on October 23, 2024 and sell it today you would earn a total of  35.00  from holding Genting Plantations Bhd or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tenaga Nasional Bhd  vs.  Genting Plantations Bhd

Tenaga Nasional Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenaga Nasional Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tenaga Nasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Genting Plantations Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genting Plantations Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Genting Plantations may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tenaga Nasional and Genting Plantations

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

The idea behind Tenaga Nasional Bhd and Genting Plantations 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.