Correlation Between Tenaga Nasional and LPI Capital

Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and LPI Capital 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 LPI Capital 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 LPI Capital Bhd, you can compare the effects of market volatilities on Tenaga Nasional and LPI Capital 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 LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaga Nasional and LPI Capital.

Diversification Opportunities for Tenaga Nasional and LPI Capital

-0.29

Correlation Coefficient

Tenaga Nasional  LPI Capital

Very good diversification

The 3 months correlation between Tenaga and LPI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital 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 LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and LPI Capital go up and down completely randomly.

Pair Corralation between Tenaga Nasional and LPI Capital

Assuming the 90 days trading horizon Tenaga Nasional Bhd is expected to under-perform the LPI Capital. In addition to that, Tenaga Nasional is 1.1 times more volatile than LPI Capital Bhd. It trades about -0.11 of its total potential returns per unit of risk. LPI Capital Bhd is currently generating about 0.26 per unit of volatility. If you would invest  1,209  in LPI Capital Bhd on December 31, 2024 and sell it today you would earn a total of  231.00  from holding LPI Capital Bhd or generate 19.11% return on investment over 90 days.

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

Tenaga Nasional Bhd  vs.  LPI Capital Bhd

Tenaga Nasional Bhd

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

LPI Capital Bhd

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LPI Capital Bhd are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, LPI Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenaga Nasional and LPI Capital

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

The idea behind Tenaga Nasional Bhd and LPI Capital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.