Correlation Between Sapura Industrial and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Sapura Industrial and CPE 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 Sapura Industrial and CPE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapura Industrial Bhd and CPE Technology Berhad, you can compare the effects of market volatilities on Sapura Industrial and CPE 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 Sapura Industrial with a short position of CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapura Industrial and CPE Technology.
Diversification Opportunities for Sapura Industrial and CPE Technology
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sapura and CPE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd and CPE Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPE Technology Berhad and Sapura 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 Sapura Industrial Bhd are associated (or correlated) with CPE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPE Technology Berhad has no effect on the direction of Sapura Industrial i.e., Sapura Industrial and CPE Technology go up and down completely randomly.
Pair Corralation between Sapura Industrial and CPE Technology
Assuming the 90 days trading horizon Sapura Industrial is expected to generate 3.55 times less return on investment than CPE Technology. But when comparing it to its historical volatility, Sapura Industrial Bhd is 3.26 times less risky than CPE Technology. It trades about 0.15 of its potential returns per unit of risk. CPE Technology Berhad is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 80.00 in CPE Technology Berhad on August 27, 2024 and sell it today you would earn a total of 10.00 from holding CPE Technology Berhad or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapura Industrial Bhd vs. CPE Technology Berhad
Performance |
| Timeline |
| Sapura Industrial Bhd |
| CPE Technology Berhad |
Sapura Industrial and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapura Industrial and CPE Technology
The main advantage of trading using opposite Sapura Industrial and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial position performs unexpectedly, CPE 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 CPE Technology will offset losses from the drop in CPE Technology's long position.| Sapura Industrial vs. Eversafe Rubber Bhd | Sapura Industrial vs. Digistar Bhd | Sapura Industrial vs. Minetech Resources Bhd | Sapura Industrial vs. OpenSys M Bhd |
| CPE Technology vs. Malayan Banking Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Petronas Chemicals Group | CPE Technology vs. Tenaga Nasional 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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