Correlation Between PMB Technology and Central Industrial
Can any of the company-specific risk be diversified away by investing in both PMB Technology 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 PMB Technology and Central Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PMB Technology Bhd and Central Industrial Corp, you can compare the effects of market volatilities on PMB Technology 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 PMB Technology with a short position of Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMB Technology and Central Industrial.
Diversification Opportunities for PMB Technology and Central Industrial
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between PMB and Central is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PMB Technology Bhd 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 PMB Technology 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 PMB Technology Bhd 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 PMB Technology i.e., PMB Technology and Central Industrial go up and down completely randomly.
Pair Corralation between PMB Technology and Central Industrial
Assuming the 90 days trading horizon PMB Technology Bhd is expected to under-perform the Central Industrial. But the stock apears to be less risky and, when comparing its historical volatility, PMB Technology Bhd is 1.01 times less risky than Central Industrial. The stock trades about -0.07 of its potential returns per unit of risk. The Central Industrial Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Central Industrial Corp on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Central Industrial Corp or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PMB Technology Bhd vs. Central Industrial Corp
Performance |
| Timeline |
| PMB Technology Bhd |
| Central Industrial Corp |
PMB Technology and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PMB Technology and Central Industrial
The main advantage of trading using opposite PMB Technology and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PMB Technology 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.The idea behind PMB Technology Bhd and Central Industrial Corp 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.| Central Industrial vs. Supercomnet Technologies Bhd | Central Industrial vs. Aurelius Technologies Bhd | Central Industrial vs. PMB Technology Bhd | Central Industrial vs. Star Media Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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