Correlation Between CB Industrial and Computer Forms
Can any of the company-specific risk be diversified away by investing in both CB Industrial 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 CB Industrial and Computer Forms 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 Computer Forms Bhd, you can compare the effects of market volatilities on CB Industrial 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 CB Industrial with a short position of Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Industrial and Computer Forms.
Diversification Opportunities for CB Industrial and Computer Forms
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 7076 and Computer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product 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 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 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 CB Industrial i.e., CB Industrial and Computer Forms go up and down completely randomly.
Pair Corralation between CB Industrial and Computer Forms
Assuming the 90 days trading horizon CB Industrial Product is expected to under-perform the Computer Forms. But the stock apears to be less risky and, when comparing its historical volatility, CB Industrial Product is 2.74 times less risky than Computer Forms. The stock trades about -0.35 of its potential returns per unit of risk. The Computer Forms Bhd is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Computer Forms Bhd on November 4, 2024 and sell it today you would lose (1.00) from holding Computer Forms Bhd or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CB Industrial Product vs. Computer Forms Bhd
Performance |
| Timeline |
| CB Industrial Product |
| Computer Forms Bhd |
CB Industrial and Computer Forms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CB Industrial and Computer Forms
The main advantage of trading using opposite CB Industrial and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CB Industrial 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.| CB Industrial vs. ECM Libra Financial | CB Industrial vs. Farm Price Holdings | CB Industrial vs. Sports Toto Berhad | CB Industrial vs. Al Aqar Healthcare |
| Computer Forms vs. Diversified Gateway Solutions | Computer Forms vs. MClean Technologies Bhd | Computer Forms vs. Sports Toto Berhad | Computer Forms vs. PIE Industrial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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