Correlation Between Nasdaq and Batu Kawan

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

By analyzing existing cross correlation between Nasdaq Inc and Batu Kawan Bhd, you can compare the effects of market volatilities on Nasdaq and Batu Kawan 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 Nasdaq with a short position of Batu Kawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Batu Kawan.

Diversification Opportunities for Nasdaq and Batu Kawan

0.86

Correlation Coefficient

Nasdaq  Batu Kawan

Very poor diversification

The 3 months correlation between Nasdaq and Batu is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Batu Kawan Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batu Kawan Bhd and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Batu Kawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batu Kawan Bhd has no effect on the direction of Nasdaq i.e., Nasdaq and Batu Kawan go up and down completely randomly.

Pair Corralation between Nasdaq and Batu Kawan

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.92 times more return on investment than Batu Kawan. However, Nasdaq is 1.92 times more volatile than Batu Kawan Bhd. It trades about 0.04 of its potential returns per unit of risk. Batu Kawan Bhd is currently generating about -0.01 per unit of risk. If you would invest  6,073  in Nasdaq Inc on September 28, 2024 and sell it today you would earn a total of  1,757  from holding Nasdaq Inc or generate 28.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.36%
Values	Daily Returns

Nasdaq Inc  vs.  Batu Kawan Bhd

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Batu Kawan Bhd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Batu Kawan Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Batu Kawan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nasdaq and Batu Kawan

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

The idea behind Nasdaq Inc and Batu Kawan Bhd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.