Correlation Between Central Industrial and Computer Forms
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Computer Forms 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 Computer Forms 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 Computer Forms Bhd, you can compare the effects of market volatilities on Central Industrial and Computer Forms 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 Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Computer Forms.
Diversification Opportunities for Central Industrial and Computer Forms
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Computer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Computer Forms Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Forms Bhd 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 Computer Forms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Forms Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and Computer Forms go up and down completely randomly.
Pair Corralation between Central Industrial and Computer Forms
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.23 times more return on investment than Computer Forms. However, Central Industrial Corp is 4.32 times less risky than Computer Forms. It trades about 0.12 of its potential returns per unit of risk. Computer Forms Bhd is currently generating about -0.11 per unit of risk. If you would invest 82.00 in Central Industrial Corp on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Central Industrial Corp or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Central Industrial Corp vs. Computer Forms Bhd
Performance |
| Timeline |
| Central Industrial Corp |
| Computer Forms Bhd |
Central Industrial and Computer Forms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Computer Forms
The main advantage of trading using opposite Central Industrial and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Computer Forms 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 Computer Forms will offset losses from the drop in Computer Forms' long position.| Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. Protasco Bhd | Central Industrial vs. Mercury Industries Bhd |
| Computer Forms vs. Dufu Tech Corp | Computer Forms vs. Central Industrial Corp | Computer Forms vs. ONETECH SOLUTIONS HOLDINGS | Computer Forms vs. Binasat Communications 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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