Correlation Between Central Industrial and Supercomnet Technologies
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Supercomnet Technologies 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 Central Industrial and Supercomnet Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Industrial Corp and Supercomnet Technologies Bhd, you can compare the effects of market volatilities on Central Industrial and Supercomnet Technologies 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 Central Industrial with a short position of Supercomnet Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Supercomnet Technologies.
Diversification Opportunities for Central Industrial and Supercomnet Technologies
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Supercomnet is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Supercomnet Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercomnet Technologies and Central 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 Central Industrial Corp are associated (or correlated) with Supercomnet Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercomnet Technologies has no effect on the direction of Central Industrial i.e., Central Industrial and Supercomnet Technologies go up and down completely randomly.
Pair Corralation between Central Industrial and Supercomnet Technologies
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.38 times more return on investment than Supercomnet Technologies. However, Central Industrial Corp is 2.62 times less risky than Supercomnet Technologies. It trades about 0.08 of its potential returns per unit of risk. Supercomnet Technologies Bhd is currently generating about 0.01 per unit of risk. If you would invest 84.00 in Central Industrial Corp on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Central Industrial Corp or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Central Industrial Corp vs. Supercomnet Technologies Bhd
Performance |
| Timeline |
| Central Industrial Corp |
| Supercomnet Technologies |
Central Industrial and Supercomnet Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Supercomnet Technologies
The main advantage of trading using opposite Central Industrial and Supercomnet Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Supercomnet Technologies 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 Supercomnet Technologies will offset losses from the drop in Supercomnet Technologies' long position.| Central Industrial vs. Sunway Construction Group | Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. PESTECH International Bhd | Central Industrial vs. Tadmax Resources Berhad |
| Supercomnet Technologies vs. Greatech Technology Bhd | Supercomnet Technologies vs. Genetec Technology Bhd | Supercomnet Technologies vs. PIE Industrial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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