Correlation Between Computer Forms and ES Ceramics
Can any of the company-specific risk be diversified away by investing in both Computer Forms and ES Ceramics 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 ES Ceramics 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 ES Ceramics Technology, you can compare the effects of market volatilities on Computer Forms and ES Ceramics 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 ES Ceramics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Forms and ES Ceramics.
Diversification Opportunities for Computer Forms and ES Ceramics
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Computer and 0100 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Computer Forms Bhd and ES Ceramics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Ceramics Technology 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 ES Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Ceramics Technology has no effect on the direction of Computer Forms i.e., Computer Forms and ES Ceramics go up and down completely randomly.
Pair Corralation between Computer Forms and ES Ceramics
Assuming the 90 days trading horizon Computer Forms Bhd is expected to generate 1.23 times more return on investment than ES Ceramics. However, Computer Forms is 1.23 times more volatile than ES Ceramics Technology. It trades about -0.07 of its potential returns per unit of risk. ES Ceramics Technology is currently generating about -0.14 per unit of risk. If you would invest 11.00 in Computer Forms Bhd on November 4, 2024 and sell it today you would lose (1.00) from holding Computer Forms Bhd or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Forms Bhd vs. ES Ceramics Technology
Performance |
| Timeline |
| Computer Forms Bhd |
| ES Ceramics Technology |
Computer Forms and ES Ceramics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Forms and ES Ceramics
The main advantage of trading using opposite Computer Forms and ES Ceramics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Forms position performs unexpectedly, ES Ceramics 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 ES Ceramics will offset losses from the drop in ES Ceramics' long position.| Computer Forms vs. Diversified Gateway Solutions | Computer Forms vs. MClean Technologies Bhd | Computer Forms vs. Sports Toto Berhad | Computer Forms vs. PIE Industrial Bhd |
| ES Ceramics vs. Apollo Food Holdings | ES Ceramics vs. SSF Home Group | ES Ceramics vs. Kossan Rubber Industries | ES Ceramics vs. Steel Hawk Berhad |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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