Correlation Between Sapura Industrial and Asian Pac

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

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

Diversification Opportunities for Sapura Industrial and Asian Pac

-0.28

Correlation Coefficient

Sapura Industrial  Asian Pac

Very good diversification

The 3 months correlation between Sapura and Asian is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and Asian Pac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Pac Holdings and Sapura 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 Sapura Industrial Bhd are associated (or correlated) with Asian Pac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Pac Holdings has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and Asian Pac go up and down completely randomly.

Pair Corralation between Sapura Industrial and Asian Pac

Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 0.84 times more return on investment than Asian Pac. However, Sapura Industrial Bhd is 1.2 times less risky than Asian Pac. It trades about 0.06 of its potential returns per unit of risk. Asian Pac Holdings is currently generating about 0.01 per unit of risk. If you would invest  82.00  in Sapura Industrial Bhd on September 26, 2024 and sell it today you would earn a total of  4.00  from holding Sapura Industrial Bhd or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Sapura Industrial Bhd  vs.  Asian Pac Holdings

Sapura Industrial Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapura Industrial Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sapura Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asian Pac Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asian Pac Holdings 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 Sapura Industrial and Asian Pac

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

The idea behind Sapura Industrial Bhd and Asian Pac Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.