Correlation Between Sime Darby and NFI

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

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

Diversification Opportunities for Sime Darby and NFI

0.41

Correlation Coefficient

Sime Darby  NFI

Very weak diversification

The 3 months correlation between Sime and NFI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sime Darby Bhd and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and Sime Darby 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 Sime Darby Bhd are associated (or correlated) with NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Sime Darby i.e., Sime Darby and NFI go up and down completely randomly.

Pair Corralation between Sime Darby and NFI

If you would invest  51.00  in Sime Darby Bhd on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Sime Darby Bhd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Sime Darby Bhd  vs.  NFI Group

Sime Darby Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sime Darby Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Sime Darby is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NFI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sime Darby and NFI

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

The idea behind Sime Darby Bhd and NFI Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.