Correlation Between PIE Industrial and Cloudpoint Technology

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Can any of the company-specific risk be diversified away by investing in both PIE Industrial and Cloudpoint 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 PIE Industrial and Cloudpoint Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Cloudpoint Technology Berhad, you can compare the effects of market volatilities on PIE Industrial and Cloudpoint 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 PIE Industrial with a short position of Cloudpoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Cloudpoint Technology.

Diversification Opportunities for PIE Industrial and Cloudpoint Technology

PIECloudpointDiversified AwayPIECloudpointDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between PIE and Cloudpoint is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Cloudpoint Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudpoint Technology and PIE 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 PIE Industrial Bhd are associated (or correlated) with Cloudpoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudpoint Technology has no effect on the direction of PIE Industrial i.e., PIE Industrial and Cloudpoint Technology go up and down completely randomly.

Pair Corralation between PIE Industrial and Cloudpoint Technology

Assuming the 90 days trading horizon PIE Industrial is expected to generate 1.45 times less return on investment than Cloudpoint Technology. But when comparing it to its historical volatility, PIE Industrial Bhd is 1.42 times less risky than Cloudpoint Technology. It trades about 0.25 of its potential returns per unit of risk. Cloudpoint Technology Berhad is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Cloudpoint Technology Berhad on September 15, 2024 and sell it today you would earn a total of  9.00  from holding Cloudpoint Technology Berhad or generate 10.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

PIE Industrial Bhd  vs.  Cloudpoint Technology Berhad

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 51015202530
JavaScript chart by amCharts 3.21.157095 0277
       Timeline  
PIE Industrial Bhd 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec55.25.45.65.866.26.4
Cloudpoint Technology 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cloudpoint Technology Berhad are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cloudpoint Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.750.80.850.9

PIE Industrial and Cloudpoint Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.64-4.23-2.81-1.390.01.533.094.656.2 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.157095 0277
       Returns  

Pair Trading with PIE Industrial and Cloudpoint Technology

The main advantage of trading using opposite PIE Industrial and Cloudpoint Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial position performs unexpectedly, Cloudpoint 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 Cloudpoint Technology will offset losses from the drop in Cloudpoint Technology's long position.
The idea behind PIE Industrial Bhd and Cloudpoint Technology Berhad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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