Correlation Between Malam Team and Hilan

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Can any of the company-specific risk be diversified away by investing in both Malam Team and Hilan 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 Malam Team and Hilan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malam Team and Hilan, you can compare the effects of market volatilities on Malam Team and Hilan 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 Malam Team with a short position of Hilan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malam Team and Hilan.

Diversification Opportunities for Malam Team and Hilan

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Malam and Hilan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Malam Team and Hilan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilan and Malam Team 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 Malam Team are associated (or correlated) with Hilan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilan has no effect on the direction of Malam Team i.e., Malam Team and Hilan go up and down completely randomly.

Pair Corralation between Malam Team and Hilan

Assuming the 90 days trading horizon Malam Team is expected to generate 1.34 times more return on investment than Hilan. However, Malam Team is 1.34 times more volatile than Hilan. It trades about 0.19 of its potential returns per unit of risk. Hilan is currently generating about 0.06 per unit of risk. If you would invest  598,000  in Malam Team on October 21, 2024 and sell it today you would earn a total of  291,000  from holding Malam Team or generate 48.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Malam Team  vs.  Hilan

 Performance 
       Timeline  
Malam Team 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Malam Team are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malam Team sustained solid returns over the last few months and may actually be approaching a breakup point.
Hilan 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hilan are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilan sustained solid returns over the last few months and may actually be approaching a breakup point.

Malam Team and Hilan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Malam Team and Hilan

The main advantage of trading using opposite Malam Team and Hilan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malam Team position performs unexpectedly, Hilan 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 Hilan will offset losses from the drop in Hilan's long position.
The idea behind Malam Team and Hilan 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.
Check out your portfolio center.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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