Correlation Between Minetech Resources and Tambun Indah

Can any of the company-specific risk be diversified away by investing in both Minetech Resources and Tambun Indah 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 Minetech Resources and Tambun Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Minetech Resources and Tambun Indah

0.4

Correlation Coefficient

Minetech Resources  Tambun Indah

Very weak diversification

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

Pair Corralation between Minetech Resources and Tambun Indah

Assuming the 90 days trading horizon Minetech Resources Bhd is expected to generate 3.82 times more return on investment than Tambun Indah. However, Minetech Resources is 3.82 times more volatile than Tambun Indah Land. It trades about -0.02 of its potential returns per unit of risk. Tambun Indah Land is currently generating about -0.09 per unit of risk. If you would invest  13.00  in Minetech Resources Bhd on December 25, 2024 and sell it today you would lose (2.00) from holding Minetech Resources Bhd or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Minetech Resources Bhd  vs.  Tambun Indah Land

Minetech Resources Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minetech Resources 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.

Tambun Indah Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tambun Indah Land 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 Minetech Resources and Tambun Indah

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

The idea behind Minetech Resources Bhd and Tambun Indah Land 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.