Correlation Between Bina Darulaman and Amalgamated Industrial

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

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

Diversification Opportunities for Bina Darulaman and Amalgamated Industrial

-0.07

Correlation Coefficient

Bina Darulaman  Amalgamated Industrial

Good diversification

The 3 months correlation between Bina and Amalgamated is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bina Darulaman Bhd and Amalgamated Industrial Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Industrial and Bina Darulaman 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 Bina Darulaman Bhd are associated (or correlated) with Amalgamated Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Industrial has no effect on the direction of Bina Darulaman i.e., Bina Darulaman and Amalgamated Industrial go up and down completely randomly.

Pair Corralation between Bina Darulaman and Amalgamated Industrial

Assuming the 90 days trading horizon Bina Darulaman Bhd is expected to under-perform the Amalgamated Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Bina Darulaman Bhd is 2.62 times less risky than Amalgamated Industrial. The stock trades about -0.07 of its potential returns per unit of risk. The Amalgamated Industrial Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Amalgamated Industrial Steel on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Amalgamated Industrial Steel or generate 8.33% return on investment over 90 days.

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

Bina Darulaman Bhd  vs.  Amalgamated Industrial Steel

Bina Darulaman Bhd

Risk-Adjusted Performance

0 of 100

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 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.

Amalgamated Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Industrial Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Amalgamated Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bina Darulaman and Amalgamated Industrial

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

The idea behind Bina Darulaman Bhd and Amalgamated Industrial Steel 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.