Correlation Between Constellation Brands and Bukit Jalil

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

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

Diversification Opportunities for Constellation Brands and Bukit Jalil

0.1

Correlation Coefficient

Constellation Brands  Bukit Jalil

Average diversification

The 3 months correlation between Constellation and Bukit is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class 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 Constellation Brands 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 Constellation Brands Class 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 Constellation Brands i.e., Constellation Brands and Bukit Jalil go up and down completely randomly.

Pair Corralation between Constellation Brands and Bukit Jalil

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Bukit Jalil. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 14.12 times less risky than Bukit Jalil. The stock trades about -0.11 of its potential returns per unit of risk. The Bukit Jalil Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Bukit Jalil Global on October 7, 2024 and sell it today you would lose (1.00) from holding Bukit Jalil Global or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	33.33%
Values	Daily Returns

Constellation Brands Class  vs.  Bukit Jalil Global

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bukit Jalil Global

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bukit Jalil Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, Bukit Jalil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Brands and Bukit Jalil

The main advantage of trading using opposite Constellation Brands and Bukit Jalil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands 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 Constellation Brands Class 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.