Correlation Between CPE Technology and Sapura Industrial
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Sapura Industrial 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 Sapura Industrial 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 Sapura Industrial Bhd, you can compare the effects of market volatilities on CPE Technology and Sapura Industrial 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 Sapura Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Sapura Industrial.
Diversification Opportunities for CPE Technology and Sapura Industrial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CPE and Sapura is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Sapura Industrial go up and down completely randomly.
Pair Corralation between CPE Technology and Sapura Industrial
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 3.31 times more return on investment than Sapura Industrial. However, CPE Technology is 3.31 times more volatile than Sapura Industrial Bhd. It trades about 0.17 of its potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.15 per unit of risk. If you would invest 83.00 in CPE Technology Berhad on August 24, 2024 and sell it today you would earn a total of 11.00 from holding CPE Technology Berhad or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CPE Technology Berhad vs. Sapura Industrial Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Sapura Industrial Bhd |
CPE Technology and Sapura Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Sapura Industrial
The main advantage of trading using opposite CPE Technology and Sapura Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Sapura Industrial 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 Sapura Industrial will offset losses from the drop in Sapura Industrial'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 |
| Sapura Industrial vs. Lyc Healthcare Bhd | Sapura Industrial vs. Apex Healthcare Bhd | Sapura Industrial vs. TAS Offshore Bhd | Sapura Industrial vs. Resintech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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