Correlation Between Scientex Packaging and HeiTech Padu

Can any of the company-specific risk be diversified away by investing in both Scientex Packaging and HeiTech Padu 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 Scientex Packaging and HeiTech Padu into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Scientex Packaging and HeiTech Padu

0.65

Correlation Coefficient

Scientex Packaging  HeiTech Padu

Poor diversification

The 3 months correlation between Scientex and HeiTech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Scientex Packaging and HeiTech Padu Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeiTech Padu Bhd and Scientex Packaging 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 Scientex Packaging are associated (or correlated) with HeiTech Padu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeiTech Padu Bhd has no effect on the direction of Scientex Packaging i.e., Scientex Packaging and HeiTech Padu go up and down completely randomly.

Pair Corralation between Scientex Packaging and HeiTech Padu

Assuming the 90 days trading horizon Scientex Packaging is expected to under-perform the HeiTech Padu. But the stock apears to be less risky and, when comparing its historical volatility, Scientex Packaging is 1.78 times less risky than HeiTech Padu. The stock trades about -0.47 of its potential returns per unit of risk. The HeiTech Padu Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  268.00  in HeiTech Padu Bhd on December 5, 2024 and sell it today you would earn a total of  3.00  from holding HeiTech Padu Bhd or generate 1.12% return on investment over 90 days.

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

Scientex Packaging  vs.  HeiTech Padu Bhd

Scientex Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scientex Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

HeiTech Padu Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days HeiTech Padu Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Scientex Packaging and HeiTech Padu

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

The idea behind Scientex Packaging and HeiTech Padu 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .