Correlation Between ES Ceramics and Central Industrial
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Central Industrial 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 ES Ceramics and Central Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and Central Industrial Corp, you can compare the effects of market volatilities on ES Ceramics and Central Industrial 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 ES Ceramics with a short position of Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Central Industrial.
Diversification Opportunities for ES Ceramics and Central Industrial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0100 and Central is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Central Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Industrial Corp and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Central Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Industrial Corp has no effect on the direction of ES Ceramics i.e., ES Ceramics and Central Industrial go up and down completely randomly.
Pair Corralation between ES Ceramics and Central Industrial
Assuming the 90 days trading horizon ES Ceramics Technology is expected to generate 3.48 times more return on investment than Central Industrial. However, ES Ceramics is 3.48 times more volatile than Central Industrial Corp. It trades about 0.06 of its potential returns per unit of risk. Central Industrial Corp is currently generating about 0.14 per unit of risk. If you would invest 16.00 in ES Ceramics Technology on October 9, 2024 and sell it today you would earn a total of 1.00 from holding ES Ceramics Technology or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. Central Industrial Corp
Performance |
| Timeline |
| ES Ceramics Technology |
| Central Industrial Corp |
ES Ceramics and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and Central Industrial
The main advantage of trading using opposite ES Ceramics and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Central Industrial 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 Central Industrial will offset losses from the drop in Central Industrial's long position.| ES Ceramics vs. MClean Technologies Bhd | ES Ceramics vs. RHB Bank Bhd | ES Ceramics vs. YTL Hospitality REIT | ES Ceramics vs. Greatech Technology Bhd |
| Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. PESTECH International Bhd | Central Industrial vs. Pesona Metro Holdings | Central Industrial vs. Ho Hup Construction |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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