Correlation Between CPE Technology and Sunway Construction
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Sunway Construction 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 Sunway Construction 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 Sunway Construction Group, you can compare the effects of market volatilities on CPE Technology and Sunway Construction 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 Sunway Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Sunway Construction.
Diversification Opportunities for CPE Technology and Sunway Construction
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CPE and Sunway is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction 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 Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of CPE Technology i.e., CPE Technology and Sunway Construction go up and down completely randomly.
Pair Corralation between CPE Technology and Sunway Construction
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.91 times more return on investment than Sunway Construction. However, CPE Technology Berhad is 1.1 times less risky than Sunway Construction. It trades about -0.01 of its potential returns per unit of risk. Sunway Construction Group is currently generating about -0.06 per unit of risk. If you would invest 104.00 in CPE Technology Berhad on November 2, 2024 and sell it today you would lose (7.00) from holding CPE Technology Berhad or give up 6.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Sunway Construction Group
Performance |
| Timeline |
| CPE Technology Berhad |
| Sunway Construction |
CPE Technology and Sunway Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Sunway Construction
The main advantage of trading using opposite CPE Technology and Sunway Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Sunway Construction 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 Sunway Construction will offset losses from the drop in Sunway Construction's long position.| CPE Technology vs. KPJ Healthcare Bhd | CPE Technology vs. Sapura Industrial Bhd | CPE Technology vs. Diversified Gateway Solutions | CPE Technology vs. Carlsberg Brewery Malaysia |
| Sunway Construction vs. Kluang Rubber | Sunway Construction vs. RHB Bank Bhd | Sunway Construction vs. Al Aqar Healthcare | Sunway Construction vs. Aeon Credit Service |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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