Correlation Between CPE Technology and Computer Forms
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Computer Forms 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 Computer Forms 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 Computer Forms Bhd, you can compare the effects of market volatilities on CPE Technology and Computer Forms 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 Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Computer Forms.
Diversification Opportunities for CPE Technology and Computer Forms
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CPE and Computer is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Computer Forms Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Forms 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 Computer Forms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Forms Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Computer Forms go up and down completely randomly.
Pair Corralation between CPE Technology and Computer Forms
Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the Computer Forms. But the stock apears to be less risky and, when comparing its historical volatility, CPE Technology Berhad is 6.85 times less risky than Computer Forms. The stock trades about -0.42 of its potential returns per unit of risk. The Computer Forms Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Computer Forms Bhd on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Computer Forms Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Computer Forms Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Computer Forms Bhd |
CPE Technology and Computer Forms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Computer Forms
The main advantage of trading using opposite CPE Technology and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Computer Forms 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 Computer Forms will offset losses from the drop in Computer Forms' 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 |
| Computer Forms vs. Mercury Industries Bhd | Computer Forms vs. Awanbiru Technology Bhd | Computer Forms vs. IHH Healthcare Bhd | Computer Forms vs. CB Industrial Product |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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