Correlation Between Central Industrial and Binasat Communications
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Binasat Communications 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 Binasat Communications 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 Binasat Communications Bhd, you can compare the effects of market volatilities on Central Industrial and Binasat Communications 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 Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Binasat Communications.
Diversification Opportunities for Central Industrial and Binasat Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Binasat is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications 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 Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Central Industrial i.e., Central Industrial and Binasat Communications go up and down completely randomly.
Pair Corralation between Central Industrial and Binasat Communications
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.8 times more return on investment than Binasat Communications. However, Central Industrial Corp is 1.25 times less risky than Binasat Communications. It trades about 0.11 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.01 per unit of risk. If you would invest 35.00 in Central Industrial Corp on August 31, 2024 and sell it today you would earn a total of 50.00 from holding Central Industrial Corp or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Central Industrial Corp vs. Binasat Communications Bhd
Performance |
| Timeline |
| Central Industrial Corp |
| Binasat Communications |
Central Industrial and Binasat Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Binasat Communications
The main advantage of trading using opposite Central Industrial and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' 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 |
| Binasat Communications vs. Digistar Bhd | Binasat Communications vs. Minetech Resources Bhd | Binasat Communications vs. Swift Haulage Bhd | Binasat Communications vs. Bina Darulaman 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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