Correlation Between Central Industrial and Tadmax Resources
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Tadmax Resources 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 Tadmax Resources 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 Tadmax Resources Berhad, you can compare the effects of market volatilities on Central Industrial and Tadmax Resources 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 Tadmax Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Tadmax Resources.
Diversification Opportunities for Central Industrial and Tadmax Resources
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Tadmax is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Tadmax Resources Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tadmax Resources Berhad 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 Tadmax Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tadmax Resources Berhad has no effect on the direction of Central Industrial i.e., Central Industrial and Tadmax Resources go up and down completely randomly.
Pair Corralation between Central Industrial and Tadmax Resources
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.97 times more return on investment than Tadmax Resources. However, Central Industrial Corp is 1.03 times less risky than Tadmax Resources. It trades about 0.04 of its potential returns per unit of risk. Tadmax Resources Berhad is currently generating about 0.0 per unit of risk. If you would invest 74.00 in Central Industrial Corp on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Central Industrial Corp or generate 17.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.52% |
| Values | Daily Returns |
Central Industrial Corp vs. Tadmax Resources Berhad
Performance |
| Timeline |
| Central Industrial Corp |
| Tadmax Resources Berhad |
Central Industrial and Tadmax Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Tadmax Resources
The main advantage of trading using opposite Central Industrial and Tadmax Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Tadmax Resources 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 Tadmax Resources will offset losses from the drop in Tadmax Resources' long position.| Central Industrial vs. Sunway Construction Group | Central Industrial vs. Pesona Metro Holdings | Central Industrial vs. Ho Hup Construction |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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