Correlation Between CB Industrial and Malpac Holdings

Can any of the company-specific risk be diversified away by investing in both CB Industrial and Malpac Holdings 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 CB Industrial and Malpac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CB Industrial Product and Malpac Holdings Bhd, you can compare the effects of market volatilities on CB Industrial and Malpac Holdings 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 CB Industrial with a short position of Malpac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CB Industrial and Malpac Holdings.

Diversification Opportunities for CB Industrial and Malpac Holdings

0.55

Correlation Coefficient

CB Industrial  Malpac Holdings

Very weak diversification

The 3 months correlation between 7076 and Malpac is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and Malpac Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malpac Holdings Bhd and CB Industrial 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 CB Industrial Product are associated (or correlated) with Malpac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malpac Holdings Bhd has no effect on the direction of CB Industrial i.e., CB Industrial and Malpac Holdings go up and down completely randomly.

Pair Corralation between CB Industrial and Malpac Holdings

Assuming the 90 days trading horizon CB Industrial Product is expected to generate 1.69 times more return on investment than Malpac Holdings. However, CB Industrial is 1.69 times more volatile than Malpac Holdings Bhd. It trades about -0.06 of its potential returns per unit of risk. Malpac Holdings Bhd is currently generating about -0.14 per unit of risk. If you would invest  135.00  in CB Industrial Product on October 6, 2024 and sell it today you would lose (4.00) from holding CB Industrial Product or give up 2.96% of portfolio value over 90 days.

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

CB Industrial Product  vs.  Malpac Holdings Bhd

CB Industrial Product

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CB Industrial Product are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CB Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Malpac Holdings Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malpac Holdings Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Malpac Holdings 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 CB Industrial and Malpac Holdings

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

The idea behind CB Industrial Product and Malpac Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.