Correlation Between BTU Metals and Bukit Jalil

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

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

Diversification Opportunities for BTU Metals and Bukit Jalil

-0.19

Correlation Coefficient

BTU Metals  Bukit Jalil

Good diversification

The 3 months correlation between BTU and Bukit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp 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 BTU Metals 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 BTU Metals Corp 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 BTU Metals i.e., BTU Metals and Bukit Jalil go up and down completely randomly.

Pair Corralation between BTU Metals and Bukit Jalil

Assuming the 90 days horizon BTU Metals is expected to generate 10.31 times less return on investment than Bukit Jalil. But when comparing it to its historical volatility, BTU Metals Corp is 4.83 times less risky than Bukit Jalil. It trades about 0.1 of its potential returns per unit of risk. Bukit Jalil Global is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.75  in Bukit Jalil Global on December 19, 2024 and sell it today you would earn a total of  2.54  from holding Bukit Jalil Global or generate 338.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.9%
Values	Daily Returns

BTU Metals Corp  vs.  Bukit Jalil Global

BTU Metals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, BTU Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Bukit Jalil Global

Risk-Adjusted Performance

Solid

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 unfluctuating basic indicators, Bukit Jalil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BTU Metals and Bukit Jalil

The main advantage of trading using opposite BTU Metals and Bukit Jalil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals 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 BTU Metals Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.