Correlation Between Maming Enam and Communication Cable

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

By analyzing existing cross correlation between Maming Enam Sembilan and Communication Cable Systems, you can compare the effects of market volatilities on Maming Enam and Communication Cable 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 Maming Enam with a short position of Communication Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maming Enam and Communication Cable.

Diversification Opportunities for Maming Enam and Communication Cable

-0.4

Correlation Coefficient

Maming Enam  Communication Cable

Very good diversification

The 3 months correlation between Maming and Communication is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Maming Enam Sembilan and Communication Cable Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Cable and Maming Enam 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 Maming Enam Sembilan are associated (or correlated) with Communication Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Cable has no effect on the direction of Maming Enam i.e., Maming Enam and Communication Cable go up and down completely randomly.

Pair Corralation between Maming Enam and Communication Cable

Assuming the 90 days trading horizon Maming Enam Sembilan is expected to generate 1.73 times more return on investment than Communication Cable. However, Maming Enam is 1.73 times more volatile than Communication Cable Systems. It trades about 0.02 of its potential returns per unit of risk. Communication Cable Systems is currently generating about -0.01 per unit of risk. If you would invest  26,800  in Maming Enam Sembilan on December 2, 2024 and sell it today you would lose (8,800) from holding Maming Enam Sembilan or give up 32.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Maming Enam Sembilan  vs.  Communication Cable Systems

Maming Enam Sembilan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maming Enam Sembilan 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 forward-looking signals 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.

Communication Cable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Cable Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Communication Cable disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maming Enam and Communication Cable

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

The idea behind Maming Enam Sembilan and Communication Cable Systems 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.