Correlation Between Press Metal and UNIQUE

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

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

Diversification Opportunities for Press Metal and UNIQUE

-0.02

Correlation Coefficient

Press Metal  UNIQUE

Good diversification

The 3 months correlation between Press and UNIQUE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal Bhd and UNIQUE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQUE and Press Metal 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 Press Metal Bhd are associated (or correlated) with UNIQUE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQUE has no effect on the direction of Press Metal i.e., Press Metal and UNIQUE go up and down completely randomly.

Pair Corralation between Press Metal and UNIQUE

Assuming the 90 days trading horizon Press Metal is expected to generate 5.97 times less return on investment than UNIQUE. But when comparing it to its historical volatility, Press Metal Bhd is 2.06 times less risky than UNIQUE. It trades about 0.01 of its potential returns per unit of risk. UNIQUE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  33.00  in UNIQUE on October 7, 2024 and sell it today you would earn a total of  7.00  from holding UNIQUE or generate 21.21% return on investment over 90 days.

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

Press Metal Bhd  vs.  UNIQUE

Press Metal Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Press Metal Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Press Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

UNIQUE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQUE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, UNIQUE disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Press Metal and UNIQUE

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

The idea behind Press Metal Bhd and UNIQUE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.