Correlation Between CPE Technology and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Mercury Industries 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 Mercury Industries 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 Mercury Industries Bhd, you can compare the effects of market volatilities on CPE Technology and Mercury Industries 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 Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Mercury Industries.
Diversification Opportunities for CPE Technology and Mercury Industries
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CPE and Mercury is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Mercury Industries Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Industries 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 Mercury Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Industries Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Mercury Industries go up and down completely randomly.
Pair Corralation between CPE Technology and Mercury Industries
Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the Mercury Industries. In addition to that, CPE Technology is 1.32 times more volatile than Mercury Industries Bhd. It trades about -0.05 of its total potential returns per unit of risk. Mercury Industries Bhd is currently generating about 0.01 per unit of volatility. If you would invest 96.00 in Mercury Industries Bhd on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Mercury Industries Bhd or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPE Technology Berhad vs. Mercury Industries Bhd
Performance |
| Timeline |
| CPE Technology Berhad |
| Mercury Industries Bhd |
CPE Technology and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Mercury Industries
The main advantage of trading using opposite CPE Technology and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Mercury Industries 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 Mercury Industries will offset losses from the drop in Mercury Industries' long position.| CPE Technology vs. Farm Price Holdings | CPE Technology vs. KPJ Healthcare Bhd | CPE Technology vs. Sunway Construction Group | CPE Technology vs. Ho Hup Construction |
| Mercury Industries vs. Mycron Steel Bhd | Mercury Industries vs. Steel Hawk Berhad | Mercury Industries vs. Eonmetall Group Bhd | Mercury Industries vs. Malaysia Steel Works |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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