Correlation Between Compass Diversified and Bukit Jalil

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

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

Diversification Opportunities for Compass Diversified and Bukit Jalil

-0.08

Correlation Coefficient

Compass Diversified  Bukit Jalil

Good diversification

The 3 months correlation between Compass and Bukit is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings 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 Compass Diversified 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 Compass Diversified Holdings 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 Compass Diversified i.e., Compass Diversified and Bukit Jalil go up and down completely randomly.

Pair Corralation between Compass Diversified and Bukit Jalil

Given the investment horizon of 90 days Compass Diversified is expected to generate 73.41 times less return on investment than Bukit Jalil. But when comparing it to its historical volatility, Compass Diversified Holdings is 25.1 times less risky than Bukit Jalil. It trades about 0.05 of its potential returns per unit of risk. Bukit Jalil Global is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3.44  in Bukit Jalil Global on October 7, 2024 and sell it today you would lose (0.61) from holding Bukit Jalil Global or give up 17.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.24%
Values	Daily Returns

Compass Diversified Holdings  vs.  Bukit Jalil Global

Compass Diversified

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Compass Diversified may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bukit Jalil Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bukit Jalil Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Bukit Jalil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compass Diversified and Bukit Jalil

The main advantage of trading using opposite Compass Diversified and Bukit Jalil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified 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 Compass Diversified Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.