Correlation Between Hartalega Holdings and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Hartalega Holdings 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 Hartalega Holdings and CPE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartalega Holdings Bhd and CPE Technology Berhad, you can compare the effects of market volatilities on Hartalega Holdings 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 Hartalega Holdings with a short position of CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartalega Holdings and CPE Technology.
Diversification Opportunities for Hartalega Holdings and CPE Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartalega and CPE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hartalega Holdings 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 Hartalega Holdings 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 Hartalega Holdings 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 Hartalega Holdings i.e., Hartalega Holdings and CPE Technology go up and down completely randomly.
Pair Corralation between Hartalega Holdings and CPE Technology
Assuming the 90 days trading horizon Hartalega Holdings Bhd is expected to under-perform the CPE Technology. In addition to that, Hartalega Holdings is 1.35 times more volatile than CPE Technology Berhad. It trades about -0.23 of its total potential returns per unit of risk. CPE Technology Berhad is currently generating about -0.07 per unit of volatility. If you would invest 92.00 in CPE Technology Berhad on October 25, 2024 and sell it today you would lose (2.00) from holding CPE Technology Berhad or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartalega Holdings Bhd vs. CPE Technology Berhad
Performance |
| Timeline |
| Hartalega Holdings Bhd |
| CPE Technology Berhad |
Hartalega Holdings and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartalega Holdings and CPE Technology
The main advantage of trading using opposite Hartalega Holdings and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartalega Holdings 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.| Hartalega Holdings vs. British American Tobacco | Hartalega Holdings vs. Cosmos Technology International | Hartalega Holdings vs. Systech Bhd | Hartalega Holdings vs. Supercomnet Technologies Bhd |
| CPE Technology vs. Cosmos Technology International | CPE Technology vs. Impiana Hotels Bhd | CPE Technology vs. Berjaya Food Bhd | CPE Technology vs. Icon Offshore 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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