Correlation Between CPE Technology and Daya Materials

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

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

Diversification Opportunities for CPE Technology and Daya Materials

-0.58

Correlation Coefficient

CPE Technology  Daya Materials

Excellent diversification

The 3 months correlation between CPE and Daya is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Daya Materials Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daya Materials Bhd and CPE 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 CPE Technology Berhad are associated (or correlated) with Daya Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daya Materials Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Daya Materials go up and down completely randomly.

Pair Corralation between CPE Technology and Daya Materials

Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 0.7 times more return on investment than Daya Materials. However, CPE Technology Berhad is 1.42 times less risky than Daya Materials. It trades about 0.01 of its potential returns per unit of risk. Daya Materials Bhd is currently generating about -0.01 per unit of risk. If you would invest  90.00  in CPE Technology Berhad on October 24, 2024 and sell it today you would earn a total of  0.00  from holding CPE Technology Berhad or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	57.2%
Values	Daily Returns

CPE Technology Berhad  vs.  Daya Materials Bhd

CPE Technology Berhad

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPE Technology Berhad are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, CPE Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Daya Materials Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daya Materials Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Daya Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CPE Technology and Daya Materials

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

The idea behind CPE Technology Berhad and Daya Materials 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.