Correlation Between CB Industrial and Central Industrial
Can any of the company-specific risk be diversified away by investing in both CB Industrial and Central Industrial 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 Central Industrial 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 Central Industrial Corp, you can compare the effects of market volatilities on CB Industrial and Central Industrial 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 Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Industrial and Central Industrial.
Diversification Opportunities for CB Industrial and Central Industrial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 7076 and Central is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and Central Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Industrial Corp 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 Central Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Industrial Corp has no effect on the direction of CB Industrial i.e., CB Industrial and Central Industrial go up and down completely randomly.
Pair Corralation between CB Industrial and Central Industrial
Assuming the 90 days trading horizon CB Industrial Product is expected to under-perform the Central Industrial. In addition to that, CB Industrial is 1.99 times more volatile than Central Industrial Corp. It trades about -0.38 of its total potential returns per unit of risk. Central Industrial Corp is currently generating about -0.11 per unit of volatility. If you would invest 90.00 in Central Industrial Corp on November 3, 2024 and sell it today you would lose (2.00) from holding Central Industrial Corp or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CB Industrial Product vs. Central Industrial Corp
Performance |
| Timeline |
| CB Industrial Product |
| Central Industrial Corp |
CB Industrial and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CB Industrial and Central Industrial
The main advantage of trading using opposite CB Industrial and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CB Industrial position performs unexpectedly, Central Industrial 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 Central Industrial will offset losses from the drop in Central Industrial's long position.| CB Industrial vs. Hong Leong Bank | CB Industrial vs. Sports Toto Berhad | CB Industrial vs. DC HEALTHCARE HOLDINGS | CB Industrial vs. British American Tobacco |
| Central Industrial vs. Cloudpoint Technology Berhad | Central Industrial vs. Pantech Group Holdings | Central Industrial vs. Systech Bhd | Central Industrial vs. Binasat Communications 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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