Correlation Between CB Industrial and Protasco Bhd

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

Diversification Opportunities for CB Industrial and Protasco Bhd

-0.22

Correlation Coefficient

CB Industrial  Protasco Bhd

Very good diversification

The 3 months correlation between 7076 and Protasco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and Protasco Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protasco 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 Protasco Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protasco Bhd has no effect on the direction of CB Industrial i.e., CB Industrial and Protasco Bhd go up and down completely randomly.

Pair Corralation between CB Industrial and Protasco Bhd

Assuming the 90 days trading horizon CB Industrial Product is expected to under-perform the Protasco Bhd. But the stock apears to be less risky and, when comparing its historical volatility, CB Industrial Product is 2.11 times less risky than Protasco Bhd. The stock trades about -0.29 of its potential returns per unit of risk. The Protasco Bhd is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Protasco Bhd on November 30, 2024 and sell it today you would lose (5.00) from holding Protasco Bhd or give up 13.51% of portfolio value over 90 days.

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

CB Industrial Product  vs.  Protasco Bhd

CB Industrial Product

Risk-Adjusted Performance

Very Weak

Over the last 90 days CB Industrial Product 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Protasco Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Protasco Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Protasco Bhd may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with CB Industrial and Protasco Bhd

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

The idea behind CB Industrial Product and Protasco 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.