Correlation Between Brite Tech and Cengild Medical

Can any of the company-specific risk be diversified away by investing in both Brite Tech and Cengild Medical 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 Brite Tech and Cengild Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brite Tech Bhd and Cengild Medical Berhad, you can compare the effects of market volatilities on Brite Tech and Cengild Medical 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 Brite Tech with a short position of Cengild Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brite Tech and Cengild Medical.

Diversification Opportunities for Brite Tech and Cengild Medical

0.02

Correlation Coefficient

Brite Tech  Cengild Medical

Significant diversification

The 3 months correlation between Brite and Cengild is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Brite Tech Bhd and Cengild Medical Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cengild Medical Berhad and Brite Tech 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 Brite Tech Bhd are associated (or correlated) with Cengild Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cengild Medical Berhad has no effect on the direction of Brite Tech i.e., Brite Tech and Cengild Medical go up and down completely randomly.

Pair Corralation between Brite Tech and Cengild Medical

Assuming the 90 days trading horizon Brite Tech Bhd is expected to under-perform the Cengild Medical. But the stock apears to be less risky and, when comparing its historical volatility, Brite Tech Bhd is 1.05 times less risky than Cengild Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Cengild Medical Berhad is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Cengild Medical Berhad on December 3, 2024 and sell it today you would earn a total of  0.00  from holding Cengild Medical Berhad or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brite Tech Bhd  vs.  Cengild Medical Berhad

Brite Tech Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brite Tech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cengild Medical Berhad

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cengild Medical Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cengild Medical is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Brite Tech and Cengild Medical

The main advantage of trading using opposite Brite Tech and Cengild Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brite Tech position performs unexpectedly, Cengild Medical 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 Cengild Medical will offset losses from the drop in Cengild Medical's long position.

The idea behind Brite Tech Bhd and Cengild Medical Berhad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.