Correlation Between CPE Technology and Inari Amertron

Can any of the company-specific risk be diversified away by investing in both CPE Technology and Inari Amertron 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 Inari Amertron 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 Inari Amertron Bhd, you can compare the effects of market volatilities on CPE Technology and Inari Amertron 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 Inari Amertron. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPE Technology and Inari Amertron.

Diversification Opportunities for CPE Technology and Inari Amertron

0.51

Correlation Coefficient

CPE Technology  Inari Amertron

Very weak diversification

The 3 months correlation between CPE and Inari is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Inari Amertron Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Amertron 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 Inari Amertron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Amertron Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Inari Amertron go up and down completely randomly.

Pair Corralation between CPE Technology and Inari Amertron

Assuming the 90 days trading horizon CPE Technology is expected to generate 2.14 times less return on investment than Inari Amertron. But when comparing it to its historical volatility, CPE Technology Berhad is 1.17 times less risky than Inari Amertron. It trades about 0.11 of its potential returns per unit of risk. Inari Amertron Bhd is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  285.00  in Inari Amertron Bhd on October 4, 2024 and sell it today you would earn a total of  21.00  from holding Inari Amertron Bhd or generate 7.37% return on investment over 90 days.

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

CPE Technology Berhad  vs.  Inari Amertron Bhd

CPE Technology Berhad

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CPE Technology Berhad are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CPE Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Inari Amertron Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inari Amertron Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Inari Amertron may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CPE Technology and Inari Amertron

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

The idea behind CPE Technology Berhad and Inari Amertron 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 Stocks Directory module to find actively traded stocks across global markets.