Correlation Between Central Industrial and Hartalega Holdings

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

Diversification Opportunities for Central Industrial and Hartalega Holdings

-0.41

Correlation Coefficient

Central Industrial  Hartalega Holdings

Very good diversification

The 3 months correlation between Central and Hartalega is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Hartalega Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartalega Holdings 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 Hartalega Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartalega Holdings Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and Hartalega Holdings go up and down completely randomly.

Pair Corralation between Central Industrial and Hartalega Holdings

Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.25 times more return on investment than Hartalega Holdings. However, Central Industrial Corp is 3.99 times less risky than Hartalega Holdings. It trades about 0.02 of its potential returns per unit of risk. Hartalega Holdings Bhd is currently generating about -0.27 per unit of risk. If you would invest  86.00  in Central Industrial Corp on December 25, 2024 and sell it today you would earn a total of  1.00  from holding Central Industrial Corp or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Central Industrial Corp  vs.  Hartalega Holdings Bhd

Central Industrial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Industrial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Central Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Hartalega Holdings Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartalega Holdings 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 Central Industrial and Hartalega Holdings

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

The idea behind Central Industrial Corp and Hartalega 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.