Correlation Between Rojana Industrial and CPR Gomu

Can any of the company-specific risk be diversified away by investing in both Rojana Industrial and CPR Gomu 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 Rojana Industrial and CPR Gomu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rojana Industrial Park and CPR Gomu Industrial, you can compare the effects of market volatilities on Rojana Industrial and CPR Gomu 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 Rojana Industrial with a short position of CPR Gomu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rojana Industrial and CPR Gomu.

Diversification Opportunities for Rojana Industrial and CPR Gomu

-0.35

Correlation Coefficient

Rojana Industrial  CPR Gomu

Very good diversification

The 3 months correlation between Rojana and CPR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Rojana Industrial Park and CPR Gomu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPR Gomu Industrial and Rojana 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 Rojana Industrial Park are associated (or correlated) with CPR Gomu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPR Gomu Industrial has no effect on the direction of Rojana Industrial i.e., Rojana Industrial and CPR Gomu go up and down completely randomly.

Pair Corralation between Rojana Industrial and CPR Gomu

Assuming the 90 days trading horizon Rojana Industrial is expected to generate 3.29 times less return on investment than CPR Gomu. But when comparing it to its historical volatility, Rojana Industrial Park is 1.61 times less risky than CPR Gomu. It trades about 0.06 of its potential returns per unit of risk. CPR Gomu Industrial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  284.00  in CPR Gomu Industrial on September 3, 2024 and sell it today you would earn a total of  74.00  from holding CPR Gomu Industrial or generate 26.06% return on investment over 90 days.

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

Rojana Industrial Park  vs.  CPR Gomu Industrial

Rojana Industrial Park

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rojana Industrial Park are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Rojana Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CPR Gomu Industrial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CPR Gomu Industrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, CPR Gomu disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rojana Industrial and CPR Gomu

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

The idea behind Rojana Industrial Park and CPR Gomu Industrial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.