Correlation Between CPE Technology and Insas Bhd
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Insas Bhd 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 Insas Bhd 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 Insas Bhd, you can compare the effects of market volatilities on CPE Technology and Insas Bhd 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 Insas Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Insas Bhd.
Diversification Opportunities for CPE Technology and Insas Bhd
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CPE and Insas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Insas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insas Bhd 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 Insas Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insas Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Insas Bhd go up and down completely randomly.
Pair Corralation between CPE Technology and Insas Bhd
Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the Insas Bhd. In addition to that, CPE Technology is 2.35 times more volatile than Insas Bhd. It trades about -0.07 of its total potential returns per unit of risk. Insas Bhd is currently generating about -0.08 per unit of volatility. If you would invest 102.00 in Insas Bhd on September 2, 2024 and sell it today you would lose (7.00) from holding Insas Bhd or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Insas Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Insas Bhd |
CPE Technology and Insas Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Insas Bhd
The main advantage of trading using opposite CPE Technology and Insas Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Insas Bhd 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 Insas Bhd will offset losses from the drop in Insas Bhd'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 |
| Insas Bhd vs. Malayan Banking Bhd | Insas Bhd vs. Public Bank Bhd | Insas Bhd vs. Petronas Chemicals Group | Insas Bhd 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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