Correlation Between Computer Forms and PESTECH International
Can any of the company-specific risk be diversified away by investing in both Computer Forms and PESTECH International 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 PESTECH International 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 PESTECH International Bhd, you can compare the effects of market volatilities on Computer Forms and PESTECH International 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 PESTECH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Forms and PESTECH International.
Diversification Opportunities for Computer Forms and PESTECH International
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Computer and PESTECH is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Computer Forms Bhd and PESTECH International Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PESTECH International 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 PESTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PESTECH International Bhd has no effect on the direction of Computer Forms i.e., Computer Forms and PESTECH International go up and down completely randomly.
Pair Corralation between Computer Forms and PESTECH International
Assuming the 90 days trading horizon Computer Forms Bhd is expected to under-perform the PESTECH International. But the stock apears to be less risky and, when comparing its historical volatility, Computer Forms Bhd is 1.63 times less risky than PESTECH International. The stock trades about -0.08 of its potential returns per unit of risk. The PESTECH International Bhd is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14.00 in PESTECH International Bhd on October 16, 2024 and sell it today you would earn a total of 4.00 from holding PESTECH International Bhd or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Forms Bhd vs. PESTECH International Bhd
Performance |
| Timeline |
| Computer Forms Bhd |
| PESTECH International Bhd |
Computer Forms and PESTECH International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Forms and PESTECH International
The main advantage of trading using opposite Computer Forms and PESTECH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Forms position performs unexpectedly, PESTECH International 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 PESTECH International will offset losses from the drop in PESTECH International's long position.| Computer Forms vs. Sports Toto Berhad | Computer Forms vs. Petronas Chemicals Group | Computer Forms vs. Silver Ridge Holdings | Computer Forms vs. Binasat Communications Bhd |
| PESTECH International vs. Press Metal Bhd | PESTECH International vs. Choo Bee Metal | PESTECH International vs. Computer Forms Bhd | PESTECH International vs. Binasat Communications 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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