Correlation Between PIE Industrial and Binasat Communications

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

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

Diversification Opportunities for PIE Industrial and Binasat Communications

-0.31

Correlation Coefficient

PIE Industrial  Binasat Communications

Very good diversification

The 3 months correlation between PIE and Binasat is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of PIE Industrial i.e., PIE Industrial and Binasat Communications go up and down completely randomly.

Pair Corralation between PIE Industrial and Binasat Communications

Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 0.72 times more return on investment than Binasat Communications. However, PIE Industrial Bhd is 1.4 times less risky than Binasat Communications. It trades about 0.17 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.08 per unit of risk. If you would invest  536.00  in PIE Industrial Bhd on October 10, 2024 and sell it today you would earn a total of  111.00  from holding PIE Industrial Bhd or generate 20.71% return on investment over 90 days.

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

PIE Industrial Bhd  vs.  Binasat Communications Bhd

PIE Industrial Bhd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Binasat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binasat Communications Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PIE Industrial and Binasat Communications

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

The idea behind PIE Industrial Bhd and Binasat Communications 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.