Correlation Between Malayan Banking and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and CPE Technology 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 Malayan Banking and CPE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and CPE Technology Berhad, you can compare the effects of market volatilities on Malayan Banking and CPE Technology 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 Malayan Banking with a short position of CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and CPE Technology.
Diversification Opportunities for Malayan Banking and CPE Technology
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malayan and CPE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and CPE Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPE Technology Berhad and Malayan Banking 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 Malayan Banking Bhd are associated (or correlated) with CPE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPE Technology Berhad has no effect on the direction of Malayan Banking i.e., Malayan Banking and CPE Technology go up and down completely randomly.
Pair Corralation between Malayan Banking and CPE Technology
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to under-perform the CPE Technology. But the stock apears to be less risky and, when comparing its historical volatility, Malayan Banking Bhd is 4.69 times less risky than CPE Technology. The stock trades about -0.05 of its potential returns per unit of risk. The CPE Technology Berhad is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 80.00 in CPE Technology Berhad on August 28, 2024 and sell it today you would earn a total of 10.00 from holding CPE Technology Berhad or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. CPE Technology Berhad
Performance |
| Timeline |
| Malayan Banking Bhd |
| CPE Technology Berhad |
Malayan Banking and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and CPE Technology
The main advantage of trading using opposite Malayan Banking and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, CPE Technology 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 CPE Technology will offset losses from the drop in CPE Technology's long position.| Malayan Banking vs. Cengild Medical Berhad | Malayan Banking vs. YX Precious Metals | Malayan Banking vs. Melewar Industrial Group | Malayan Banking vs. Petronas Chemicals Group |
| CPE Technology vs. Malayan Banking Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Petronas Chemicals Group | CPE Technology vs. Tenaga Nasional Bhd |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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