Correlation Between Bina Darulaman and MI Technovation

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

Diversification Opportunities for Bina Darulaman and MI Technovation

0.05

Correlation Coefficient

Bina Darulaman  MI Technovation

Significant diversification

The 3 months correlation between Bina and 5286 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bina Darulaman Bhd and MI Technovation Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Technovation Bhd 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 MI Technovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Technovation Bhd has no effect on the direction of Bina Darulaman i.e., Bina Darulaman and MI Technovation go up and down completely randomly.

Pair Corralation between Bina Darulaman and MI Technovation

Assuming the 90 days trading horizon Bina Darulaman Bhd is expected to under-perform the MI Technovation. In addition to that, Bina Darulaman is 1.01 times more volatile than MI Technovation Bhd. It trades about -0.07 of its total potential returns per unit of risk. MI Technovation Bhd is currently generating about 0.05 per unit of volatility. If you would invest  198.00  in MI Technovation Bhd on September 3, 2024 and sell it today you would earn a total of  12.00  from holding MI Technovation Bhd or generate 6.06% return on investment over 90 days.

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

Bina Darulaman Bhd  vs.  MI Technovation Bhd

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.

MI Technovation Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bina Darulaman and MI Technovation

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

The idea behind Bina Darulaman Bhd and MI Technovation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.