Correlation Between Ho Hup and CB Industrial
Can any of the company-specific risk be diversified away by investing in both Ho Hup and CB 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 Ho Hup and CB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ho Hup Construction and CB Industrial Product, you can compare the effects of market volatilities on Ho Hup and CB 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 Ho Hup with a short position of CB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ho Hup and CB Industrial.
Diversification Opportunities for Ho Hup and CB Industrial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between 5169 and 7076 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ho Hup Construction and CB Industrial Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Industrial Product and Ho Hup 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 Ho Hup Construction are associated (or correlated) with CB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Industrial Product has no effect on the direction of Ho Hup i.e., Ho Hup and CB Industrial go up and down completely randomly.
Pair Corralation between Ho Hup and CB Industrial
Assuming the 90 days trading horizon Ho Hup Construction is expected to generate 4.82 times more return on investment than CB Industrial. However, Ho Hup is 4.82 times more volatile than CB Industrial Product. It trades about 0.07 of its potential returns per unit of risk. CB Industrial Product is currently generating about 0.01 per unit of risk. If you would invest 17.00 in Ho Hup Construction on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Ho Hup Construction or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ho Hup Construction vs. CB Industrial Product
Performance |
| Timeline |
| Ho Hup Construction |
| CB Industrial Product |
Ho Hup and CB Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ho Hup and CB Industrial
The main advantage of trading using opposite Ho Hup and CB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ho Hup position performs unexpectedly, CB 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 CB Industrial will offset losses from the drop in CB Industrial's long position.The idea behind Ho Hup Construction and CB Industrial Product pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CB Industrial vs. CPE Technology Berhad | CB Industrial vs. Central Industrial Corp | CB Industrial vs. Lotte Chemical Titan | CB Industrial vs. Petronas Chemicals Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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