Correlation Between Central Industrial and Choo Bee
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Choo Bee 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 Choo Bee 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 Choo Bee Metal, you can compare the effects of market volatilities on Central Industrial and Choo Bee 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 Choo Bee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Choo Bee.
Diversification Opportunities for Central Industrial and Choo Bee
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Central and Choo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Choo Bee Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choo Bee Metal 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 Choo Bee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choo Bee Metal has no effect on the direction of Central Industrial i.e., Central Industrial and Choo Bee go up and down completely randomly.
Pair Corralation between Central Industrial and Choo Bee
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.71 times more return on investment than Choo Bee. However, Central Industrial Corp is 1.41 times less risky than Choo Bee. It trades about 0.14 of its potential returns per unit of risk. Choo Bee Metal is currently generating about -0.11 per unit of risk. If you would invest 85.00 in Central Industrial Corp on October 9, 2024 and sell it today you would earn a total of 5.00 from holding Central Industrial Corp or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Industrial Corp vs. Choo Bee Metal
Performance |
| Timeline |
| Central Industrial Corp |
| Choo Bee Metal |
Central Industrial and Choo Bee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Choo Bee
The main advantage of trading using opposite Central Industrial and Choo Bee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Choo Bee 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 Choo Bee will offset losses from the drop in Choo Bee's long position.| Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. PESTECH International Bhd | Central Industrial vs. Pesona Metro Holdings | Central Industrial vs. Ho Hup Construction |
| Choo Bee vs. Silver Ridge Holdings | Choo Bee vs. IHH Healthcare Bhd | Choo Bee vs. Al Aqar Healthcare | Choo Bee vs. Computer Forms 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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