Correlation Between Pentamaster Bhd and OSK Holdings

Can any of the company-specific risk be diversified away by investing in both Pentamaster Bhd and OSK Holdings 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 Pentamaster Bhd and OSK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pentamaster Bhd and OSK Holdings

0.69

Correlation Coefficient

Pentamaster Bhd  OSK Holdings

Poor diversification

The 3 months correlation between Pentamaster and OSK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pentamaster Bhd and OSK Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSK Holdings Bhd and Pentamaster Bhd 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 Pentamaster Bhd are associated (or correlated) with OSK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSK Holdings Bhd has no effect on the direction of Pentamaster Bhd i.e., Pentamaster Bhd and OSK Holdings go up and down completely randomly.

Pair Corralation between Pentamaster Bhd and OSK Holdings

Assuming the 90 days trading horizon Pentamaster Bhd is expected to under-perform the OSK Holdings. In addition to that, Pentamaster Bhd is 1.96 times more volatile than OSK Holdings Bhd. It trades about -0.03 of its total potential returns per unit of risk. OSK Holdings Bhd is currently generating about 0.08 per unit of volatility. If you would invest  155.00  in OSK Holdings Bhd on September 27, 2024 and sell it today you would earn a total of  23.00  from holding OSK Holdings Bhd or generate 14.84% return on investment over 90 days.

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

Pentamaster Bhd  vs.  OSK Holdings Bhd

Pentamaster Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentamaster Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pentamaster Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

OSK Holdings Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSK Holdings Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, OSK Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pentamaster Bhd and OSK Holdings

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

The idea behind Pentamaster Bhd and OSK Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.