Correlation Between Eco World and PMB Technology

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

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

Diversification Opportunities for Eco World and PMB Technology

0.24

Correlation Coefficient

Eco World  PMB Technology

Modest diversification

The 3 months correlation between Eco and PMB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eco World Develop and PMB Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMB Technology Bhd and Eco World 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 Eco World Develop are associated (or correlated) with PMB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMB Technology Bhd has no effect on the direction of Eco World i.e., Eco World and PMB Technology go up and down completely randomly.

Pair Corralation between Eco World and PMB Technology

Assuming the 90 days trading horizon Eco World Develop is expected to generate 1.94 times more return on investment than PMB Technology. However, Eco World is 1.94 times more volatile than PMB Technology Bhd. It trades about 0.05 of its potential returns per unit of risk. PMB Technology Bhd is currently generating about -0.19 per unit of risk. If you would invest  187.00  in Eco World Develop on December 2, 2024 and sell it today you would earn a total of  12.00  from holding Eco World Develop or generate 6.42% return on investment over 90 days.

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

Eco World Develop  vs.  PMB Technology Bhd

Eco World Develop

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eco World Develop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Eco World may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PMB Technology Bhd

Risk-Adjusted Performance

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 weak 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 Eco World and PMB Technology

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

The idea behind Eco World Develop and PMB Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.