Correlation Analysis Between XU100 and Bursa Malaysia

Overlapping area represents the amount of risk that can be diversified away by holding XU100 and Bursa Malaysia in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bursa Malaysia and XU100 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 XU100 are associated (or correlated) with Bursa Malaysia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bursa Malaysia has no effect on the direction of XU100 i.e. XU100 and Bursa Malaysia go up and down completely randomly.