Correlation Between Axiata Group and Genting Malaysia

Can any of the company-specific risk be diversified away by investing in both Axiata Group and Genting Malaysia 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 Axiata Group and Genting Malaysia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axiata Group Bhd and Genting Malaysia Bhd, you can compare the effects of market volatilities on Axiata Group and Genting Malaysia 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 Axiata Group with a short position of Genting Malaysia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axiata Group and Genting Malaysia.

Diversification Opportunities for Axiata Group and Genting Malaysia

-0.55

Correlation Coefficient

Axiata Group  Genting Malaysia

Excellent diversification

The 3 months correlation between Axiata and Genting is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Axiata Group Bhd and Genting Malaysia Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genting Malaysia Bhd and Axiata Group 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 Axiata Group Bhd are associated (or correlated) with Genting Malaysia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genting Malaysia Bhd has no effect on the direction of Axiata Group i.e., Axiata Group and Genting Malaysia go up and down completely randomly.

Pair Corralation between Axiata Group and Genting Malaysia

Assuming the 90 days trading horizon Axiata Group Bhd is expected to under-perform the Genting Malaysia. But the stock apears to be less risky and, when comparing its historical volatility, Axiata Group Bhd is 1.79 times less risky than Genting Malaysia. The stock trades about -0.1 of its potential returns per unit of risk. The Genting Malaysia Bhd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Genting Malaysia Bhd on December 1, 2024 and sell it today you would lose (25.00) from holding Genting Malaysia Bhd or give up 11.63% of portfolio value over 90 days.

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

Axiata Group Bhd  vs.  Genting Malaysia Bhd

Axiata Group Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axiata Group 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.

Genting Malaysia Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genting Malaysia 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.

Pair Trading with Axiata Group and Genting Malaysia

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

The idea behind Axiata Group Bhd and Genting Malaysia 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.