Correlation Between CB Industrial and PIE Industrial

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

Diversification Opportunities for CB Industrial and PIE Industrial

0.88

Correlation Coefficient

CB Industrial  PIE Industrial

Very poor diversification

The 3 months correlation between 7076 and PIE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of CB Industrial i.e., CB Industrial and PIE Industrial go up and down completely randomly.

Pair Corralation between CB Industrial and PIE Industrial

Assuming the 90 days trading horizon CB Industrial Product is expected to generate 0.43 times more return on investment than PIE Industrial. However, CB Industrial Product is 2.32 times less risky than PIE Industrial. It trades about -0.22 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about -0.18 per unit of risk. If you would invest  136.00  in CB Industrial Product on December 30, 2024 and sell it today you would lose (26.00) from holding CB Industrial Product or give up 19.12% of portfolio value over 90 days.

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

CB Industrial Product  vs.  PIE Industrial 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PIE Industrial Bhd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CB Industrial and PIE Industrial

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

The idea behind CB Industrial Product and PIE Industrial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.