Correlation Between Albemarle and Bukit Jalil

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

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

Diversification Opportunities for Albemarle and Bukit Jalil

0.2

Correlation Coefficient

Albemarle  Bukit Jalil

Modest diversification

The 3 months correlation between Albemarle and Bukit is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and Bukit Jalil Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Jalil Global and Albemarle 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 Albemarle are associated (or correlated) with Bukit Jalil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Jalil Global has no effect on the direction of Albemarle i.e., Albemarle and Bukit Jalil go up and down completely randomly.

Pair Corralation between Albemarle and Bukit Jalil

Assuming the 90 days trading horizon Albemarle is expected to under-perform the Bukit Jalil. But the stock apears to be less risky and, when comparing its historical volatility, Albemarle is 22.4 times less risky than Bukit Jalil. The stock trades about 0.0 of its potential returns per unit of risk. The Bukit Jalil Global is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Bukit Jalil Global on October 24, 2024 and sell it today you would lose (0.27) from holding Bukit Jalil Global or give up 9.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Albemarle  vs.  Bukit Jalil Global

Albemarle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Albemarle is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bukit Jalil Global

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Bukit Jalil Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Bukit Jalil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albemarle and Bukit Jalil

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

The idea behind Albemarle and Bukit Jalil Global 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.