Correlation Between Victoria Insurance and Malacca Trust

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

By analyzing existing cross correlation between Victoria Insurance Tbk and Malacca Trust Wuwungan, you can compare the effects of market volatilities on Victoria Insurance and Malacca Trust 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 Victoria Insurance with a short position of Malacca Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victoria Insurance and Malacca Trust.

Diversification Opportunities for Victoria Insurance and Malacca Trust

-0.04

Correlation Coefficient

Victoria Insurance  Malacca Trust

Good diversification

The 3 months correlation between Victoria and Malacca is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk and Malacca Trust Wuwungan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Trust Wuwungan and Victoria Insurance 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 Victoria Insurance Tbk are associated (or correlated) with Malacca Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Trust Wuwungan has no effect on the direction of Victoria Insurance i.e., Victoria Insurance and Malacca Trust go up and down completely randomly.

Pair Corralation between Victoria Insurance and Malacca Trust

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the Malacca Trust. In addition to that, Victoria Insurance is 1.11 times more volatile than Malacca Trust Wuwungan. It trades about -0.07 of its total potential returns per unit of risk. Malacca Trust Wuwungan is currently generating about 0.05 per unit of volatility. If you would invest  15,400  in Malacca Trust Wuwungan on October 9, 2024 and sell it today you would earn a total of  400.00  from holding Malacca Trust Wuwungan or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.37%
Values	Daily Returns

Victoria Insurance Tbk  vs.  Malacca Trust Wuwungan

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Victoria Insurance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Malacca Trust Wuwungan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malacca Trust Wuwungan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Malacca Trust 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 Victoria Insurance and Malacca Trust

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

The idea behind Victoria Insurance Tbk and Malacca Trust Wuwungan 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 Anywhere module to track or share privately all of your investments from the convenience of any device.