Correlation Between Tenaga Nasional and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and CPE Technology 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 Tenaga Nasional and CPE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaga Nasional Bhd and CPE Technology Berhad, you can compare the effects of market volatilities on Tenaga Nasional and CPE Technology 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 Tenaga Nasional with a short position of CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaga Nasional and CPE Technology.
Diversification Opportunities for Tenaga Nasional and CPE Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tenaga and CPE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and CPE Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPE Technology Berhad and Tenaga Nasional 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 Tenaga Nasional Bhd are associated (or correlated) with CPE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPE Technology Berhad has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and CPE Technology go up and down completely randomly.
Pair Corralation between Tenaga Nasional and CPE Technology
Assuming the 90 days trading horizon Tenaga Nasional Bhd is expected to generate 0.36 times more return on investment than CPE Technology. However, Tenaga Nasional Bhd is 2.77 times less risky than CPE Technology. It trades about 0.11 of its potential returns per unit of risk. CPE Technology Berhad is currently generating about 0.01 per unit of risk. If you would invest 831.00 in Tenaga Nasional Bhd on August 24, 2024 and sell it today you would earn a total of 549.00 from holding Tenaga Nasional Bhd or generate 66.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.97% |
| Values | Daily Returns |
Tenaga Nasional Bhd vs. CPE Technology Berhad
Performance |
| Timeline |
| Tenaga Nasional Bhd |
| CPE Technology Berhad |
Tenaga Nasional and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaga Nasional and CPE Technology
The main advantage of trading using opposite Tenaga Nasional and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaga Nasional position performs unexpectedly, CPE Technology 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 CPE Technology will offset losses from the drop in CPE Technology's long position.| Tenaga Nasional vs. Binasat Communications Bhd | Tenaga Nasional vs. Cloudpoint Technology Berhad | Tenaga Nasional vs. YTL Hospitality REIT | Tenaga Nasional vs. Al Aqar Healthcare |
| CPE Technology vs. Malayan Banking Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Petronas Chemicals Group | CPE Technology vs. Tenaga Nasional 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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