Correlation Between Top Glove and Media Prima

Can any of the company-specific risk be diversified away by investing in both Top Glove and Media Prima 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 Top Glove and Media Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Top Glove and Media Prima

0.65

Correlation Coefficient

Top Glove  Media Prima

Poor diversification

The 3 months correlation between Top and Media is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Media Prima Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Prima Bhd and Top Glove 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 Top Glove are associated (or correlated) with Media Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Prima Bhd has no effect on the direction of Top Glove i.e., Top Glove and Media Prima go up and down completely randomly.

Pair Corralation between Top Glove and Media Prima

Assuming the 90 days trading horizon Top Glove is expected to under-perform the Media Prima. But the stock apears to be less risky and, when comparing its historical volatility, Top Glove is 1.04 times less risky than Media Prima. The stock trades about -0.29 of its potential returns per unit of risk. The Media Prima Bhd is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Media Prima Bhd on December 30, 2024 and sell it today you would lose (9.00) from holding Media Prima Bhd or give up 19.15% of portfolio value over 90 days.

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

Top Glove  vs.  Media Prima Bhd

Top Glove

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Glove 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Media Prima Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Media Prima 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Top Glove and Media Prima

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

The idea behind Top Glove and Media Prima 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.