Correlation Between Bonia Bhd and Eonmetall Group

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

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

Diversification Opportunities for Bonia Bhd and Eonmetall Group

0.58

Correlation Coefficient

Bonia Bhd  Eonmetall Group

Very weak diversification

The 3 months correlation between Bonia and Eonmetall is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bonia Bhd and Eonmetall Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eonmetall Group Bhd and Bonia Bhd 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 Bonia Bhd are associated (or correlated) with Eonmetall Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eonmetall Group Bhd has no effect on the direction of Bonia Bhd i.e., Bonia Bhd and Eonmetall Group go up and down completely randomly.

Pair Corralation between Bonia Bhd and Eonmetall Group

Assuming the 90 days trading horizon Bonia Bhd is expected to under-perform the Eonmetall Group. But the stock apears to be less risky and, when comparing its historical volatility, Bonia Bhd is 2.0 times less risky than Eonmetall Group. The stock trades about -0.2 of its potential returns per unit of risk. The Eonmetall Group Bhd is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Eonmetall Group Bhd on October 2, 2024 and sell it today you would lose (2.00) from holding Eonmetall Group Bhd or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bonia Bhd  vs.  Eonmetall Group Bhd

Bonia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonia 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eonmetall Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bonia Bhd and Eonmetall Group

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

The idea behind Bonia Bhd and Eonmetall Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.