Correlation Between STRAITS TRADG and BANK HANDLOWY

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

By analyzing existing cross correlation between STRAITS TRADG SD and BANK HANDLOWY, you can compare the effects of market volatilities on STRAITS TRADG and BANK HANDLOWY 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 STRAITS TRADG with a short position of BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and BANK HANDLOWY.

Diversification Opportunities for STRAITS TRADG and BANK HANDLOWY

0.37

Correlation Coefficient

STRAITS TRADG  BANK HANDLOWY

Weak diversification

The 3 months correlation between STRAITS and BANK is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY and STRAITS TRADG 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 STRAITS TRADG SD are associated (or correlated) with BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of STRAITS TRADG i.e., STRAITS TRADG and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between STRAITS TRADG and BANK HANDLOWY

Assuming the 90 days horizon STRAITS TRADG SD is expected to generate 1.79 times more return on investment than BANK HANDLOWY. However, STRAITS TRADG is 1.79 times more volatile than BANK HANDLOWY. It trades about 0.15 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.12 per unit of risk. If you would invest  86.00  in STRAITS TRADG SD on April 21, 2025 and sell it today you would earn a total of  16.00  from holding STRAITS TRADG SD or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

STRAITS TRADG SD  vs.  BANK HANDLOWY

STRAITS TRADG SD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STRAITS TRADG SD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, STRAITS TRADG reported solid returns over the last few months and may actually be approaching a breakup point.

BANK HANDLOWY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BANK HANDLOWY may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with STRAITS TRADG and BANK HANDLOWY

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

The idea behind STRAITS TRADG SD and BANK HANDLOWY 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.