Correlation Between Techbond Group and ES Ceramics

Can any of the company-specific risk be diversified away by investing in both Techbond Group and ES Ceramics 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 Techbond Group and ES Ceramics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Techbond Group and ES Ceramics

0.65

Correlation Coefficient

Techbond Group  ES Ceramics

Poor diversification

The 3 months correlation between Techbond and 0100 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Techbond Group Bhd and ES Ceramics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Ceramics Technology and Techbond Group 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 Techbond Group Bhd are associated (or correlated) with ES Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Ceramics Technology has no effect on the direction of Techbond Group i.e., Techbond Group and ES Ceramics go up and down completely randomly.

Pair Corralation between Techbond Group and ES Ceramics

Assuming the 90 days trading horizon Techbond Group Bhd is expected to generate 0.5 times more return on investment than ES Ceramics. However, Techbond Group Bhd is 2.0 times less risky than ES Ceramics. It trades about -0.07 of its potential returns per unit of risk. ES Ceramics Technology is currently generating about -0.1 per unit of risk. If you would invest  39.00  in Techbond Group Bhd on December 4, 2024 and sell it today you would lose (4.00) from holding Techbond Group Bhd or give up 10.26% of portfolio value over 90 days.

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

Techbond Group Bhd  vs.  ES Ceramics Technology

Techbond Group Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techbond Group 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.

ES Ceramics Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days ES Ceramics Technology 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 Techbond Group and ES Ceramics

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

The idea behind Techbond Group Bhd and ES Ceramics Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.