Correlation Between Computer Forms and Brite Tech
Can any of the company-specific risk be diversified away by investing in both Computer Forms and Brite Tech 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 Computer Forms and Brite Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Forms Bhd and Brite Tech Bhd, you can compare the effects of market volatilities on Computer Forms and Brite Tech 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 Computer Forms with a short position of Brite Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Forms and Brite Tech.
Diversification Opportunities for Computer Forms and Brite Tech
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Computer and Brite is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Computer Forms Bhd and Brite Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brite Tech Bhd and Computer Forms 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 Computer Forms Bhd are associated (or correlated) with Brite Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brite Tech Bhd has no effect on the direction of Computer Forms i.e., Computer Forms and Brite Tech go up and down completely randomly.
Pair Corralation between Computer Forms and Brite Tech
Assuming the 90 days trading horizon Computer Forms is expected to generate 4.67 times less return on investment than Brite Tech. In addition to that, Computer Forms is 1.46 times more volatile than Brite Tech Bhd. It trades about 0.01 of its total potential returns per unit of risk. Brite Tech Bhd is currently generating about 0.09 per unit of volatility. If you would invest 31.00 in Brite Tech Bhd on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Brite Tech Bhd or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Forms Bhd vs. Brite Tech Bhd
Performance |
| Timeline |
| Computer Forms Bhd |
| Brite Tech Bhd |
Computer Forms and Brite Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Forms and Brite Tech
The main advantage of trading using opposite Computer Forms and Brite Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Forms position performs unexpectedly, Brite Tech 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 Brite Tech will offset losses from the drop in Brite Tech's long position.| Computer Forms vs. Minetech Resources Bhd | Computer Forms vs. Sunzen Biotech Bhd | Computer Forms vs. Hengyuan Refining | Computer Forms vs. Impiana Hotels Bhd |
| Brite Tech vs. Minetech Resources Bhd | Brite Tech vs. Sunzen Biotech Bhd | Brite Tech vs. Hengyuan Refining | Brite Tech vs. Impiana Hotels 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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