Correlation Between CPE Technology and Dnonce Tech
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Dnonce Tech 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 Dnonce Tech 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 Dnonce Tech Bhd, you can compare the effects of market volatilities on CPE Technology and Dnonce Tech 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 Dnonce Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Dnonce Tech.
Diversification Opportunities for CPE Technology and Dnonce Tech
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CPE and Dnonce is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Dnonce Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dnonce Tech 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 Dnonce Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dnonce Tech Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Dnonce Tech go up and down completely randomly.
Pair Corralation between CPE Technology and Dnonce Tech
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.62 times more return on investment than Dnonce Tech. However, CPE Technology Berhad is 1.62 times less risky than Dnonce Tech. It trades about 0.01 of its potential returns per unit of risk. Dnonce Tech Bhd is currently generating about -0.04 per unit of risk. If you would invest 91.00 in CPE Technology Berhad on September 2, 2024 and sell it today you would lose (1.00) from holding CPE Technology Berhad or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.39% |
| Values | Daily Returns |
CPE Technology Berhad vs. Dnonce Tech Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Dnonce Tech Bhd |
CPE Technology and Dnonce Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Dnonce Tech
The main advantage of trading using opposite CPE Technology and Dnonce Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Dnonce Tech 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 Dnonce Tech will offset losses from the drop in Dnonce Tech'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 |
| Dnonce Tech vs. Binasat Communications Bhd | Dnonce Tech vs. MClean Technologies Bhd | Dnonce Tech vs. Greatech Technology Bhd | Dnonce Tech vs. Radiant Globaltech 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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