Correlation Between Central Industrial and PPB Group
Can any of the company-specific risk be diversified away by investing in both Central Industrial and PPB Group 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 Central Industrial and PPB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Industrial Corp and PPB Group Bhd, you can compare the effects of market volatilities on Central Industrial and PPB Group 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 Central Industrial with a short position of PPB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and PPB Group.
Diversification Opportunities for Central Industrial and PPB Group
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Central and PPB is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and PPB Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPB Group Bhd and Central 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 Central Industrial Corp are associated (or correlated) with PPB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPB Group Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and PPB Group go up and down completely randomly.
Pair Corralation between Central Industrial and PPB Group
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.64 times more return on investment than PPB Group. However, Central Industrial Corp is 1.57 times less risky than PPB Group. It trades about 0.0 of its potential returns per unit of risk. PPB Group Bhd is currently generating about -0.23 per unit of risk. If you would invest 86.00 in Central Industrial Corp on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Central Industrial Corp or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Central Industrial Corp vs. PPB Group Bhd
Performance |
Timeline |
Central Industrial Corp |
PPB Group Bhd |
Central Industrial and PPB Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Central Industrial and PPB Group
The main advantage of trading using opposite Central Industrial and PPB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, PPB Group 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 PPB Group will offset losses from the drop in PPB Group's long position.Central Industrial vs. Sunway Construction Group | Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. PESTECH International Bhd | Central Industrial vs. Tadmax Resources Berhad |
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Check out your portfolio center.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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