Correlation Between Central Industrial and Cloudpoint Technology
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Cloudpoint Technology 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 Cloudpoint Technology 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 Cloudpoint Technology Berhad, you can compare the effects of market volatilities on Central Industrial and Cloudpoint Technology 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 Cloudpoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Cloudpoint Technology.
Diversification Opportunities for Central Industrial and Cloudpoint Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Cloudpoint is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Cloudpoint Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudpoint Technology 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 Cloudpoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudpoint Technology has no effect on the direction of Central Industrial i.e., Central Industrial and Cloudpoint Technology go up and down completely randomly.
Pair Corralation between Central Industrial and Cloudpoint Technology
Assuming the 90 days trading horizon Central Industrial is expected to generate 8.27 times less return on investment than Cloudpoint Technology. But when comparing it to its historical volatility, Central Industrial Corp is 2.46 times less risky than Cloudpoint Technology. It trades about 0.05 of its potential returns per unit of risk. Cloudpoint Technology Berhad is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Cloudpoint Technology Berhad on October 23, 2024 and sell it today you would earn a total of 10.00 from holding Cloudpoint Technology Berhad or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Central Industrial Corp vs. Cloudpoint Technology Berhad
Performance |
| Timeline |
| Central Industrial Corp |
| Cloudpoint Technology |
Central Industrial and Cloudpoint Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Cloudpoint Technology
The main advantage of trading using opposite Central Industrial and Cloudpoint Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Cloudpoint Technology 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 Cloudpoint Technology will offset losses from the drop in Cloudpoint Technology's long position.| Central Industrial vs. Awanbiru Technology Bhd | Central Industrial vs. Mercury Industries Bhd | Central Industrial vs. CB Industrial Product | Central Industrial vs. Choo Bee Metal |
| Cloudpoint Technology vs. Ho Hup Construction | Cloudpoint Technology vs. ES Ceramics Technology | Cloudpoint Technology vs. Press Metal Bhd | Cloudpoint Technology vs. Supercomnet Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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