Correlation Between CPE Technology and Sime Darby
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Sime Darby 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 Sime Darby 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 Sime Darby Plantation, you can compare the effects of market volatilities on CPE Technology and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Sime Darby.
Diversification Opportunities for CPE Technology and Sime Darby
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPE and Sime is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of CPE Technology i.e., CPE Technology and Sime Darby go up and down completely randomly.
Pair Corralation between CPE Technology and Sime Darby
Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the Sime Darby. In addition to that, CPE Technology is 4.46 times more volatile than Sime Darby Plantation. It trades about -0.21 of its total potential returns per unit of risk. Sime Darby Plantation is currently generating about -0.23 per unit of volatility. If you would invest 484.00 in Sime Darby Plantation on January 14, 2025 and sell it today you would lose (29.00) from holding Sime Darby Plantation or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Sime Darby Plantation
Performance |
| Timeline |
| CPE Technology Berhad |
| Sime Darby Plantation |
CPE Technology and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Sime Darby
The main advantage of trading using opposite CPE Technology and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby'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 |
| Sime Darby vs. Malayan Banking Bhd | Sime Darby vs. Rubberex M | Sime Darby vs. Kluang Rubber | Sime Darby vs. TAS Offshore 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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