Correlation Between Cincinnati Financial and Bukit Jalil

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

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

Diversification Opportunities for Cincinnati Financial and Bukit Jalil

-0.52

Correlation Coefficient

Cincinnati Financial  Bukit Jalil

Excellent diversification

The 3 months correlation between Cincinnati and Bukit is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial i.e., Cincinnati Financial and Bukit Jalil go up and down completely randomly.

Pair Corralation between Cincinnati Financial and Bukit Jalil

Given the investment horizon of 90 days Cincinnati Financial is expected to generate 0.09 times more return on investment than Bukit Jalil. However, Cincinnati Financial is 11.57 times less risky than Bukit Jalil. It trades about 0.12 of its potential returns per unit of risk. Bukit Jalil Global is currently generating about -0.03 per unit of risk. If you would invest  11,782  in Cincinnati Financial on September 29, 2024 and sell it today you would earn a total of  2,623  from holding Cincinnati Financial or generate 22.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.16%
Values	Daily Returns

Cincinnati Financial  vs.  Bukit Jalil Global

Cincinnati Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cincinnati Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cincinnati Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bukit Jalil Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bukit Jalil Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Bukit Jalil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cincinnati Financial and Bukit Jalil

The main advantage of trading using opposite Cincinnati Financial and Bukit Jalil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial 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 Cincinnati Financial 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.