Correlation Between CPE Technology and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Petronas Chemicals 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 Petronas Chemicals 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 Petronas Chemicals Group, you can compare the effects of market volatilities on CPE Technology and Petronas Chemicals 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 Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Petronas Chemicals.
Diversification Opportunities for CPE Technology and Petronas Chemicals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CPE and Petronas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals 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 Petronas Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Chemicals has no effect on the direction of CPE Technology i.e., CPE Technology and Petronas Chemicals go up and down completely randomly.
Pair Corralation between CPE Technology and Petronas Chemicals
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.36 times more return on investment than Petronas Chemicals. However, CPE Technology Berhad is 2.78 times less risky than Petronas Chemicals. It trades about -0.42 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.27 per unit of risk. If you would invest 97.00 in CPE Technology Berhad on November 28, 2024 and sell it today you would lose (11.00) from holding CPE Technology Berhad or give up 11.34% 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. Petronas Chemicals Group
Performance |
| Timeline |
| CPE Technology Berhad |
| Petronas Chemicals |
CPE Technology and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Petronas Chemicals
The main advantage of trading using opposite CPE Technology and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Petronas Chemicals 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 Petronas Chemicals will offset losses from the drop in Petronas Chemicals' long position.| CPE Technology vs. Melewar Industrial Group | CPE Technology vs. Kossan Rubber Industries | CPE Technology vs. Sports Toto Berhad | CPE Technology vs. Kluang Rubber |
| Petronas Chemicals vs. MClean Technologies Bhd | Petronas Chemicals vs. Alliance Financial Group | Petronas Chemicals vs. Central Industrial Corp | Petronas Chemicals vs. ECM Libra Financial |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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