Our website is made possible by displaying non-intrusive online advertisements to our visitors.
Please consider supporting us by disabling or pausing your ad blocker.
Take the example of Bursa construction/property company Naim and Bursa oil and gas company Dayang. You can see from the revenue trend chart that there is not much correlation between them. Actually there was a negative 10% correlation.
But then Naim owns about 25% of Dayang and probably influened its decision making. So are they uncorrelated stocks? https://i.postimg.cc/L5GkR9p9/Dayang-vs-Naim.png
From a statistics perspective, as long as 2 stocks are not 100% correlated, having them in a portfolio will result in a lower volatility compared to their individual volatility. If you looking for less volatility, then having them both is better than just investing in one.
Of course, the big picture question is if part of the performance of Naim is tied to the performance of Dayang, would it be better to look for another oil and gas stock?