Correlation Between Sapura Industrial and TAS Offshore

Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and TAS Offshore 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 TAS Offshore 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 TAS Offshore Bhd, you can compare the effects of market volatilities on Sapura Industrial and TAS Offshore 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 TAS Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and TAS Offshore.

Diversification Opportunities for Sapura Industrial and TAS Offshore

0.29

Correlation Coefficient

Sapura Industrial  TAS Offshore

Modest diversification

The 3 months correlation between Sapura and TAS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and TAS Offshore Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAS Offshore Bhd 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 TAS Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAS Offshore Bhd has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and TAS Offshore go up and down completely randomly.

Pair Corralation between Sapura Industrial and TAS Offshore

Assuming the 90 days trading horizon Sapura Industrial Bhd is expected to generate 0.87 times more return on investment than TAS Offshore. However, Sapura Industrial Bhd is 1.16 times less risky than TAS Offshore. It trades about -0.02 of its potential returns per unit of risk. TAS Offshore Bhd is currently generating about -0.06 per unit of risk. If you would invest  86.00  in Sapura Industrial Bhd on December 23, 2024 and sell it today you would lose (3.00) from holding Sapura Industrial Bhd or give up 3.49% of portfolio value over 90 days.

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

Sapura Industrial Bhd  vs.  TAS Offshore Bhd

Sapura Industrial Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sapura Industrial Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

TAS Offshore Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days TAS Offshore 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.

Pair Trading with Sapura Industrial and TAS Offshore

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

The idea behind Sapura Industrial Bhd and TAS Offshore 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.