Correlation Between Central Industrial and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Malaysia Steel 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 Malaysia Steel 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 Malaysia Steel Works, you can compare the effects of market volatilities on Central Industrial and Malaysia Steel 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 Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Malaysia Steel.
Diversification Opportunities for Central Industrial and Malaysia Steel
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Malaysia is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works 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 Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of Central Industrial i.e., Central Industrial and Malaysia Steel go up and down completely randomly.
Pair Corralation between Central Industrial and Malaysia Steel
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.48 times more return on investment than Malaysia Steel. However, Central Industrial Corp is 2.07 times less risky than Malaysia Steel. It trades about 0.08 of its potential returns per unit of risk. Malaysia Steel Works 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 | 100.0% |
| Values | Daily Returns |
Central Industrial Corp vs. Malaysia Steel Works
Performance |
| Timeline |
| Central Industrial Corp |
| Malaysia Steel Works |
Central Industrial and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Malaysia Steel
The main advantage of trading using opposite Central Industrial and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Malaysia Steel 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's 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 |
| Malaysia Steel vs. PMB Technology Bhd | Malaysia Steel vs. Pantech Group Holdings | Malaysia Steel vs. CSC Steel Holdings | Malaysia Steel vs. Coraza Integrated Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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