Correlation Between PMB Technology and Genting Bhd

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

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

Diversification Opportunities for PMB Technology and Genting Bhd

0.4

Correlation Coefficient

PMB Technology  Genting Bhd

Very weak diversification

The 3 months correlation between PMB and Genting is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PMB Technology Bhd and Genting Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genting Bhd and PMB Technology 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 PMB Technology Bhd are associated (or correlated) with Genting Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genting Bhd has no effect on the direction of PMB Technology i.e., PMB Technology and Genting Bhd go up and down completely randomly.

Pair Corralation between PMB Technology and Genting Bhd

Assuming the 90 days trading horizon PMB Technology is expected to generate 27.51 times less return on investment than Genting Bhd. In addition to that, PMB Technology is 1.26 times more volatile than Genting Bhd. It trades about 0.01 of its total potential returns per unit of risk. Genting Bhd is currently generating about 0.25 per unit of volatility. If you would invest  365.00  in Genting Bhd on October 9, 2024 and sell it today you would earn a total of  22.00  from holding Genting Bhd or generate 6.03% return on investment over 90 days.

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

PMB Technology Bhd  vs.  Genting Bhd

PMB Technology Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PMB Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PMB Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Genting Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genting Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Genting Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PMB Technology and Genting Bhd

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

The idea behind PMB Technology Bhd and Genting 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.