Correlation Between Shangri La and Bina Darulaman

Can any of the company-specific risk be diversified away by investing in both Shangri La and Bina Darulaman 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 Shangri La and Bina Darulaman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shangri La Hotels and Bina Darulaman Bhd, you can compare the effects of market volatilities on Shangri La and Bina Darulaman 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 Shangri La with a short position of Bina Darulaman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Bina Darulaman.

Diversification Opportunities for Shangri La and Bina Darulaman

0.85

Correlation Coefficient

Shangri La  Bina Darulaman

Very poor diversification

The 3 months correlation between Shangri and Bina is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Bina Darulaman Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bina Darulaman Bhd and Shangri La 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 Shangri La Hotels are associated (or correlated) with Bina Darulaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bina Darulaman Bhd has no effect on the direction of Shangri La i.e., Shangri La and Bina Darulaman go up and down completely randomly.

Pair Corralation between Shangri La and Bina Darulaman

Assuming the 90 days trading horizon Shangri La Hotels is expected to under-perform the Bina Darulaman. But the stock apears to be less risky and, when comparing its historical volatility, Shangri La Hotels is 2.79 times less risky than Bina Darulaman. The stock trades about -0.22 of its potential returns per unit of risk. The Bina Darulaman Bhd is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Bina Darulaman Bhd on December 29, 2024 and sell it today you would lose (5.00) from holding Bina Darulaman Bhd or give up 17.24% of portfolio value over 90 days.

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

Shangri La Hotels  vs.  Bina Darulaman Bhd

Shangri La Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shangri La Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bina Darulaman Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bina Darulaman Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Shangri La and Bina Darulaman

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

The idea behind Shangri La Hotels and Bina Darulaman 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.