Correlation Between Bukit Jalil and DMY Squared

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

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

Diversification Opportunities for Bukit Jalil and DMY Squared

-0.36

Correlation Coefficient

Bukit Jalil  DMY Squared

Very good diversification

The 3 months correlation between Bukit and DMY is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Jalil Global and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology and Bukit Jalil 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 Bukit Jalil Global are associated (or correlated) with DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of Bukit Jalil i.e., Bukit Jalil and DMY Squared go up and down completely randomly.

Pair Corralation between Bukit Jalil and DMY Squared

Assuming the 90 days horizon Bukit Jalil Global is expected to generate 45.35 times more return on investment than DMY Squared. However, Bukit Jalil is 45.35 times more volatile than dMY Squared Technology. It trades about 0.04 of its potential returns per unit of risk. dMY Squared Technology is currently generating about 0.03 per unit of risk. If you would invest  17.00  in Bukit Jalil Global on October 5, 2024 and sell it today you would lose (7.00) from holding Bukit Jalil Global or give up 41.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.59%
Values	Daily Returns

Bukit Jalil Global  vs.  dMY Squared Technology

Bukit Jalil Global

Risk-Adjusted Performance

0 of 100

Insignificant

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

dMY Squared Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bukit Jalil and DMY Squared

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

The idea behind Bukit Jalil Global and dMY Squared Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.