Correlation Between Amanah Leasing and United Paper

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

By analyzing existing cross correlation between Amanah Leasing Public and United Paper Public, you can compare the effects of market volatilities on Amanah Leasing and United Paper 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 Amanah Leasing with a short position of United Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amanah Leasing and United Paper.

Diversification Opportunities for Amanah Leasing and United Paper

-0.83

Correlation Coefficient

Amanah Leasing  United Paper

Pay attention - limited upside

The 3 months correlation between Amanah and United is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amanah Leasing Public and United Paper Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Paper Public and Amanah Leasing 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 Amanah Leasing Public are associated (or correlated) with United Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Paper Public has no effect on the direction of Amanah Leasing i.e., Amanah Leasing and United Paper go up and down completely randomly.

Pair Corralation between Amanah Leasing and United Paper

Assuming the 90 days trading horizon Amanah Leasing Public is expected to under-perform the United Paper. In addition to that, Amanah Leasing is 2.67 times more volatile than United Paper Public. It trades about -0.09 of its total potential returns per unit of risk. United Paper Public is currently generating about 0.25 per unit of volatility. If you would invest  1,120  in United Paper Public on February 2, 2024 and sell it today you would earn a total of  40.00  from holding United Paper Public or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amanah Leasing Public  vs.  United Paper Public

Amanah Leasing Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amanah Leasing Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amanah Leasing may actually be approaching a critical reversion point that can send shares even higher in June 2024.

United Paper Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Paper Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, United Paper 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 Amanah Leasing and United Paper

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

The idea behind Amanah Leasing Public and United Paper Public 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.