Correlation Between Cloudpoint Technology and Southern Steel

Can any of the company-specific risk be diversified away by investing in both Cloudpoint Technology and Southern 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 Cloudpoint Technology and Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cloudpoint Technology and Southern Steel

0.84

Correlation Coefficient

Cloudpoint Technology  Southern Steel

Very poor diversification

The 3 months correlation between Cloudpoint and Southern is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cloudpoint Technology Berhad and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd and Cloudpoint Technology 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 Cloudpoint Technology Berhad are associated (or correlated) with Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of Cloudpoint Technology i.e., Cloudpoint Technology and Southern Steel go up and down completely randomly.

Pair Corralation between Cloudpoint Technology and Southern Steel

Assuming the 90 days trading horizon Cloudpoint Technology Berhad is expected to generate 0.65 times more return on investment than Southern Steel. However, Cloudpoint Technology Berhad is 1.53 times less risky than Southern Steel. It trades about -0.06 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.13 per unit of risk. If you would invest  91.00  in Cloudpoint Technology Berhad on December 27, 2024 and sell it today you would lose (12.00) from holding Cloudpoint Technology Berhad or give up 13.19% of portfolio value over 90 days.

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

Cloudpoint Technology Berhad  vs.  Southern Steel Bhd

Cloudpoint Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cloudpoint Technology Berhad 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.

Southern Steel Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Steel Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cloudpoint Technology and Southern Steel

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

The idea behind Cloudpoint Technology Berhad and Southern Steel Bhd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.