Correlation Between CB Industrial and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both CB Industrial and Malaysia 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 CB Industrial and Malaysia Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CB Industrial Product and Malaysia Steel Works, you can compare the effects of market volatilities on CB Industrial and Malaysia 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 CB Industrial with a short position of Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Industrial and Malaysia Steel.
Diversification Opportunities for CB Industrial and Malaysia Steel
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 7076 and Malaysia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works and CB Industrial 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 CB Industrial Product are associated (or correlated) with Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of CB Industrial i.e., CB Industrial and Malaysia Steel go up and down completely randomly.
Pair Corralation between CB Industrial and Malaysia Steel
Assuming the 90 days trading horizon CB Industrial Product is expected to under-perform the Malaysia Steel. But the stock apears to be less risky and, when comparing its historical volatility, CB Industrial Product is 1.05 times less risky than Malaysia Steel. The stock trades about -0.35 of its potential returns per unit of risk. The Malaysia Steel Works is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Malaysia Steel Works on November 4, 2024 and sell it today you would lose (2.00) from holding Malaysia Steel Works or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CB Industrial Product vs. Malaysia Steel Works
Performance |
| Timeline |
| CB Industrial Product |
| Malaysia Steel Works |
CB Industrial and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CB Industrial and Malaysia Steel
The main advantage of trading using opposite CB Industrial and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CB Industrial position performs unexpectedly, Malaysia 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.| CB Industrial vs. ECM Libra Financial | CB Industrial vs. Farm Price Holdings | CB Industrial vs. Sports Toto Berhad | CB Industrial vs. Al Aqar Healthcare |
| Malaysia Steel vs. Eonmetall Group Bhd | Malaysia Steel vs. CPE Technology Berhad | Malaysia Steel vs. ECM Libra Financial | Malaysia Steel vs. Public Bank 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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