Correlation Between CPE Technology and Leader Steel
Can any of the company-specific risk be diversified away by investing in both CPE Technology and Leader Steel 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 Leader Steel 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 Leader Steel Holdings, you can compare the effects of market volatilities on CPE Technology and Leader Steel 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 Leader Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Leader Steel.
Diversification Opportunities for CPE Technology and Leader Steel
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CPE and Leader is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Leader Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Steel Holdings 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 Leader Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Steel Holdings has no effect on the direction of CPE Technology i.e., CPE Technology and Leader Steel go up and down completely randomly.
Pair Corralation between CPE Technology and Leader Steel
Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.56 times more return on investment than Leader Steel. However, CPE Technology Berhad is 1.78 times less risky than Leader Steel. It trades about 0.04 of its potential returns per unit of risk. Leader Steel Holdings is currently generating about -0.02 per unit of risk. If you would invest 94.00 in CPE Technology Berhad on November 5, 2024 and sell it today you would earn a total of 1.00 from holding CPE Technology Berhad or generate 1.06% 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. Leader Steel Holdings
Performance |
| Timeline |
| CPE Technology Berhad |
| Leader Steel Holdings |
CPE Technology and Leader Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPE Technology and Leader Steel
The main advantage of trading using opposite CPE Technology and Leader Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology position performs unexpectedly, Leader Steel 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 Leader Steel will offset losses from the drop in Leader Steel's long position.| CPE Technology vs. Star Media Group | CPE Technology vs. Senheng New Retail | CPE Technology vs. Greatech Technology Bhd | CPE Technology vs. Apex Healthcare Bhd |
| Leader Steel vs. Systech Bhd | Leader Steel vs. Awanbiru Technology Bhd | Leader Steel vs. Sunzen Biotech Bhd | Leader Steel vs. Uchi Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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