Correlation Between Bina Darulaman and Fitters Diversified

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

Diversification Opportunities for Bina Darulaman and Fitters Diversified

-0.01

Correlation Coefficient

Bina Darulaman  Fitters Diversified

Good diversification

The 3 months correlation between Bina and Fitters is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bina Darulaman Bhd and Fitters Diversified Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fitters Diversified 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 Fitters Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fitters Diversified Bhd has no effect on the direction of Bina Darulaman i.e., Bina Darulaman and Fitters Diversified go up and down completely randomly.

Pair Corralation between Bina Darulaman and Fitters Diversified

Assuming the 90 days trading horizon Bina Darulaman Bhd is expected to under-perform the Fitters Diversified. But the stock apears to be less risky and, when comparing its historical volatility, Bina Darulaman Bhd is 3.8 times less risky than Fitters Diversified. The stock trades about -0.07 of its potential returns per unit of risk. The Fitters Diversified Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Fitters Diversified Bhd on September 4, 2024 and sell it today you would lose (0.50) from holding Fitters Diversified Bhd or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.87%
Values	Daily Returns

Bina Darulaman Bhd  vs.  Fitters Diversified 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.

Fitters Diversified Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fitters Diversified Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Fitters Diversified disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bina Darulaman and Fitters Diversified

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

The idea behind Bina Darulaman Bhd and Fitters Diversified 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.