Correlation Between Central Industrial and Press Metal
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Press Metal 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 Press Metal 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 Press Metal Bhd, you can compare the effects of market volatilities on Central Industrial and Press Metal 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 Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Press Metal.
Diversification Opportunities for Central Industrial and Press Metal
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Press is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and Press Metal go up and down completely randomly.
Pair Corralation between Central Industrial and Press Metal
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.37 times more return on investment than Press Metal. However, Central Industrial Corp is 2.73 times less risky than Press Metal. It trades about 0.12 of its potential returns per unit of risk. Press Metal Bhd is currently generating about -0.08 per unit of risk. If you would invest 82.00 in Central Industrial Corp on August 31, 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 | 100.0% |
| Values | Daily Returns |
Central Industrial Corp vs. Press Metal Bhd
Performance |
| Timeline |
| Central Industrial Corp |
| Press Metal Bhd |
Central Industrial and Press Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Press Metal
The main advantage of trading using opposite Central Industrial and Press Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Press Metal 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 Press Metal will offset losses from the drop in Press Metal'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 |
| Press Metal vs. PMB Technology Bhd | Press Metal vs. Pantech Group Holdings | Press Metal vs. CSC Steel Holdings | Press Metal 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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