Correlation Between CPE Technology and Diversified Gateway
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Diversified Gateway 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 CPE Technology and Diversified Gateway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPE Technology Berhad and Diversified Gateway Solutions, you can compare the effects of market volatilities on CPE Technology and Diversified Gateway 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 CPE Technology with a short position of Diversified Gateway. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Diversified Gateway.
Diversification Opportunities for CPE Technology and Diversified Gateway
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPE and Diversified is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Diversified Gateway Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Gateway and CPE Technology 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 CPE Technology Berhad are associated (or correlated) with Diversified Gateway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Gateway has no effect on the direction of CPE Technology i.e., CPE Technology and Diversified Gateway go up and down completely randomly.
Pair Corralation between CPE Technology and Diversified Gateway
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.87 times more return on investment than Diversified Gateway. However, CPE Technology Berhad is 1.15 times less risky than Diversified Gateway. It trades about 0.1 of its potential returns per unit of risk. Diversified Gateway Solutions is currently generating about -0.08 per unit of risk. If you would invest 85.00 in CPE Technology Berhad on August 31, 2024 and sell it today you would earn a total of 5.00 from holding CPE Technology Berhad or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Diversified Gateway Solutions
Performance |
| Timeline |
| CPE Technology Berhad |
| Diversified Gateway |
CPE Technology and Diversified Gateway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Diversified Gateway
The main advantage of trading using opposite CPE Technology and Diversified Gateway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Diversified Gateway 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 Diversified Gateway will offset losses from the drop in Diversified Gateway's long position.| CPE Technology vs. Malayan Banking Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Petronas Chemicals Group | CPE Technology vs. Tenaga Nasional Bhd |
| Diversified Gateway vs. Datasonic Group Bhd | Diversified Gateway vs. Awanbiru Technology Bhd | Diversified Gateway vs. Dataprep Holdings Bhd | Diversified Gateway vs. Systech 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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