Correlation Between Choo Bee and United Plantations

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

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

Diversification Opportunities for Choo Bee and United Plantations

-0.64

Correlation Coefficient

Choo Bee  United Plantations

Excellent diversification

The 3 months correlation between Choo and United is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Choo Bee Metal and United Plantations Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Plantations Bhd and Choo Bee 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 Choo Bee Metal are associated (or correlated) with United Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Plantations Bhd has no effect on the direction of Choo Bee i.e., Choo Bee and United Plantations go up and down completely randomly.

Pair Corralation between Choo Bee and United Plantations

Assuming the 90 days trading horizon Choo Bee Metal is expected to under-perform the United Plantations. In addition to that, Choo Bee is 1.26 times more volatile than United Plantations Bhd. It trades about -0.14 of its total potential returns per unit of risk. United Plantations Bhd is currently generating about 0.17 per unit of volatility. If you would invest  2,000  in United Plantations Bhd on December 24, 2024 and sell it today you would earn a total of  256.00  from holding United Plantations Bhd or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Choo Bee Metal  vs.  United Plantations Bhd

Choo Bee Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Choo Bee Metal 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.

United Plantations Bhd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Plantations Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Plantations disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Choo Bee and United Plantations

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

The idea behind Choo Bee Metal and United 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.