Correlation Between CPE Technology and EA Technique

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

Diversification Opportunities for CPE Technology and EA Technique

0.12

Correlation Coefficient

CPE Technology  EA Technique

Average diversification

The 3 months correlation between CPE and 5259 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad and EA Technique M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Technique M 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 EA Technique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Technique M has no effect on the direction of CPE Technology i.e., CPE Technology and EA Technique go up and down completely randomly.

Pair Corralation between CPE Technology and EA Technique

Assuming the 90 days trading horizon CPE Technology Berhad is expected to under-perform the EA Technique. In addition to that, CPE Technology is 1.67 times more volatile than EA Technique M. It trades about -0.07 of its total potential returns per unit of risk. EA Technique M is currently generating about 0.01 per unit of volatility. If you would invest  30.00  in EA Technique M on September 2, 2024 and sell it today you would earn a total of  0.00  from holding EA Technique M or generate 0.0% return on investment over 90 days.

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

CPE Technology Berhad  vs.  EA Technique M

CPE Technology Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPE Technology Berhad 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

EA Technique M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Technique M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EA Technique is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CPE Technology and EA Technique

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

The idea behind CPE Technology Berhad and EA Technique M 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.