Correlation Between CB Industrial and Axiata Group

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

Diversification Opportunities for CB Industrial and Axiata Group

-0.27

Correlation Coefficient

CB Industrial  Axiata Group

Very good diversification

The 3 months correlation between 7076 and Axiata is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CB Industrial Product and Axiata Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group 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 Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Bhd has no effect on the direction of CB Industrial i.e., CB Industrial and Axiata Group go up and down completely randomly.

Pair Corralation between CB Industrial and Axiata Group

Assuming the 90 days trading horizon CB Industrial Product is expected to generate 1.16 times more return on investment than Axiata Group. However, CB Industrial is 1.16 times more volatile than Axiata Group Bhd. It trades about 0.04 of its potential returns per unit of risk. Axiata Group Bhd is currently generating about -0.06 per unit of risk. If you would invest  126.00  in CB Industrial Product on September 15, 2024 and sell it today you would earn a total of  10.00  from holding CB Industrial Product or generate 7.94% return on investment over 90 days.

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

CB Industrial Product  vs.  Axiata Group Bhd

CB Industrial Product

Risk-Adjusted Performance

0 of 100

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 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.

Axiata Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axiata Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Axiata Group 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 Axiata Group

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

The idea behind CB Industrial Product and Axiata Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.