Correlation Between CPE Technology and Radiant Globaltech

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

Diversification Opportunities for CPE Technology and Radiant Globaltech

-0.08

Correlation Coefficient

CPE Technology  Radiant Globaltech

Good diversification

The 3 months correlation between CPE and Radiant is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and Radiant Globaltech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Globaltech 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 Radiant Globaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Globaltech Bhd has no effect on the direction of CPE Technology i.e., CPE Technology and Radiant Globaltech go up and down completely randomly.

Pair Corralation between CPE Technology and Radiant Globaltech

Assuming the 90 days trading horizon CPE Technology is expected to generate 1.85 times less return on investment than Radiant Globaltech. But when comparing it to its historical volatility, CPE Technology Berhad is 1.01 times less risky than Radiant Globaltech. It trades about 0.02 of its potential returns per unit of risk. Radiant Globaltech Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Radiant Globaltech Bhd on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Radiant Globaltech Bhd or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

CPE Technology Berhad  vs.  Radiant Globaltech Bhd

CPE Technology Berhad

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CPE Technology Berhad are ranked lower than 3 (%) 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.

Radiant Globaltech Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radiant Globaltech Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Radiant Globaltech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CPE Technology and Radiant Globaltech

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

The idea behind CPE Technology Berhad and Radiant Globaltech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.