Correlation Between Sunway Construction and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Sunway Construction 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 Sunway Construction and CPE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunway Construction Group and CPE Technology Berhad, you can compare the effects of market volatilities on Sunway Construction 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 Sunway Construction with a short position of CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunway Construction and CPE Technology.
Diversification Opportunities for Sunway Construction and CPE Technology
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunway and CPE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group 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 Sunway Construction 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 Sunway Construction Group 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 Sunway Construction i.e., Sunway Construction and CPE Technology go up and down completely randomly.
Pair Corralation between Sunway Construction and CPE Technology
Assuming the 90 days trading horizon Sunway Construction Group is expected to under-perform the CPE Technology. In addition to that, Sunway Construction is 2.57 times more volatile than CPE Technology Berhad. It trades about -0.26 of its total potential returns per unit of risk. CPE Technology Berhad is currently generating about -0.03 per unit of volatility. If you would invest 92.00 in CPE Technology Berhad on October 20, 2024 and sell it today you would lose (1.00) from holding CPE Technology Berhad or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunway Construction Group vs. CPE Technology Berhad
Performance |
| Timeline |
| Sunway Construction |
| CPE Technology Berhad |
Sunway Construction and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunway Construction and CPE Technology
The main advantage of trading using opposite Sunway Construction and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunway Construction 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.| Sunway Construction vs. ES Ceramics Technology | Sunway Construction vs. Sports Toto Berhad | Sunway Construction vs. Shangri La Hotels | Sunway Construction vs. Cosmos Technology International |
| CPE Technology vs. Magni Tech Industries | CPE Technology vs. Awanbiru Technology Bhd | CPE Technology vs. Uchi Technologies Bhd | CPE Technology vs. Supercomnet Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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