I posted an earlier tweet last week (read this), whereby I was quoting CB Industrial Product (CBIP) as a ‘directionless‘ stock (even with solid fundamentals). I believe that the tweet is erroneous (perhaps from a longer time frame perspective).
One can never be sure of the certainty of a bet’s outcome. However, one can increase the probability of winning the bet (i.e finding the trading edge) by looking at “supporting circumstances“.
Without dwelling into detailed analysis of the industry and company factors, let’s look at a possible bet – CB Industrial Product (or CBIP). This company was covered in an earlier posting. Let’s take a long position bet on CBIP. Continue reading “Finding Edge For A Bet”
Since 1979, CB Industrial Product Holdings Bhd has been equipping palm oil mills in Malaysia and around the world with high quality processing equipment and replacement parts. Over the years, the products have gained a reputation in the industry for excellent workmanship, consistent high quality and unsurpassed reliability.
As a result, the products enjoy a healthy market share in Malaysia as well as foreign markets including Indonesia, Papua New Guinea, West Africa, and Central and South America. Today, CBIP much more than just an equipment and parts manufacturer. Expanding on in-depth industry knowledge, experience and expertise in this area, CBIP successfully established as a full-fledged turnkey contractor for palm oil mills.
We look at 6 plantation stocks that are currently trading on Bursa: IOI, KLK, Genting Plantation, Hap Seng Plantation, TSH Resources and CBIP. In this analysis, we will try to explore how movements in CPO prices affect the share prices of these stocks using a simple regression analysis. We use data since Jan 2015 till date.
The results are as follows:
- The statistical relationships appear significant for IOI, KLK and Genting Plantation. Based on the derived formula, these counters are currently trading close to their predicted values.
- For TSH, Hap Seng Plantation and CBIP, the relationships appear weak, suggesting non-reliable statistical properties. These three counters exhibit negative marginal correlation with the movement of CPO
- We also set the 95% upper bound and lower bound for these stocks, setting projected resistance and support price range.
- Nothing substitutes for a detailed fundamental analysis, this is only a quick-and-easy analysis.
- Further analysis is required – including a longer time frame of data
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