Correlation Between CPE Technology and Axiata Group
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Axiata Group 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 Axiata Group 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 Axiata Group Bhd, you can compare the effects of market volatilities on CPE Technology and Axiata Group 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 Axiata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Axiata Group.
Diversification Opportunities for CPE Technology and Axiata Group
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPE and Axiata is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Axiata Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group 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 Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Axiata Group go up and down completely randomly.
Pair Corralation between CPE Technology and Axiata Group
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 1.66 times more return on investment than Axiata Group. However, CPE Technology is 1.66 times more volatile than Axiata Group Bhd. It trades about -0.04 of its potential returns per unit of risk. Axiata Group Bhd is currently generating about -0.07 per unit of risk. If you would invest 102.00 in CPE Technology Berhad on December 5, 2024 and sell it today you would lose (30.00) from holding CPE Technology Berhad or give up 29.41% 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. Axiata Group Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Axiata Group Bhd |
CPE Technology and Axiata Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Axiata Group
The main advantage of trading using opposite CPE Technology and Axiata Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Axiata Group 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 Axiata Group will offset losses from the drop in Axiata Group's long position.| CPE Technology vs. Awanbiru Technology Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Privasia Technology Bhd | CPE Technology vs. Malayan Banking Bhd |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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