Correlation Between Bina Darulaman and Shangri La

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

Diversification Opportunities for Bina Darulaman and Shangri La

0.14

Correlation Coefficient

Bina Darulaman  Shangri La

Average diversification

The 3 months correlation between Bina and Shangri is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Bina Darulaman Bhd and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels 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 Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Bina Darulaman i.e., Bina Darulaman and Shangri La go up and down completely randomly.

Pair Corralation between Bina Darulaman and Shangri La

Assuming the 90 days trading horizon Bina Darulaman Bhd is expected to under-perform the Shangri La. In addition to that, Bina Darulaman is 2.44 times more volatile than Shangri La Hotels. It trades about -0.07 of its total potential returns per unit of risk. Shangri La Hotels is currently generating about 0.04 per unit of volatility. If you would invest  202.00  in Shangri La Hotels on September 2, 2024 and sell it today you would earn a total of  5.00  from holding Shangri La Hotels or generate 2.48% 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.  Shangri La Hotels

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.

Shangri La Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shangri La Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shangri La is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bina Darulaman and Shangri La

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

The idea behind Bina Darulaman Bhd and Shangri La Hotels 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.