Correlation Between Central Industrial and Datasonic Group
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Datasonic 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 Datasonic 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 Datasonic Group Bhd, you can compare the effects of market volatilities on Central Industrial and Datasonic 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 Datasonic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Datasonic Group.
Diversification Opportunities for Central Industrial and Datasonic Group
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Datasonic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic 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 Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and Datasonic Group go up and down completely randomly.
Pair Corralation between Central Industrial and Datasonic Group
Assuming the 90 days trading horizon Central Industrial is expected to generate 78.35 times less return on investment than Datasonic Group. But when comparing it to its historical volatility, Central Industrial Corp is 2.6 times less risky than Datasonic Group. It trades about 0.0 of its potential returns per unit of risk. Datasonic Group Bhd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Datasonic Group Bhd on September 26, 2024 and sell it today you would earn a total of 2.00 from holding Datasonic Group Bhd or generate 5.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Central Industrial Corp vs. Datasonic Group Bhd
Performance |
Timeline |
Central Industrial Corp |
Datasonic Group Bhd |
Central Industrial and Datasonic Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Central Industrial and Datasonic Group
The main advantage of trading using opposite Central Industrial and Datasonic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Datasonic 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 Datasonic Group will offset losses from the drop in Datasonic 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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