Correlation Between CPE Technology and Senheng New
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Senheng New 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 Senheng New 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 Senheng New Retail, you can compare the effects of market volatilities on CPE Technology and Senheng New 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 Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Senheng New.
Diversification Opportunities for CPE Technology and Senheng New
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPE and Senheng is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail 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 Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of CPE Technology i.e., CPE Technology and Senheng New go up and down completely randomly.
Pair Corralation between CPE Technology and Senheng New
Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the Senheng New. But the stock apears to be less risky and, when comparing its historical volatility, CPE Technology Berhad is 1.97 times less risky than Senheng New. The stock trades about -0.42 of its potential returns per unit of risk. The Senheng New Retail is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Senheng New Retail on November 28, 2024 and sell it today you would lose (2.00) from holding Senheng New Retail or give up 7.69% 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. Senheng New Retail
Performance |
| Timeline |
| CPE Technology Berhad |
| Senheng New Retail |
CPE Technology and Senheng New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Senheng New
The main advantage of trading using opposite CPE Technology and Senheng New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Senheng New 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 Senheng New will offset losses from the drop in Senheng New's 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 |
| Senheng New vs. Privasia Technology Bhd | Senheng New vs. KPJ Healthcare Bhd | Senheng New vs. Eversafe Rubber Bhd | Senheng New vs. Lyc Healthcare 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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