Correlation Between Lyc Healthcare and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Lyc Healthcare and Oriental Food 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 Lyc Healthcare and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyc Healthcare Bhd and Oriental Food Industries, you can compare the effects of market volatilities on Lyc Healthcare and Oriental Food 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 Lyc Healthcare with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyc Healthcare and Oriental Food.
Diversification Opportunities for Lyc Healthcare and Oriental Food
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyc and Oriental is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lyc Healthcare Bhd and Oriental Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Food Industries and Lyc Healthcare 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 Lyc Healthcare Bhd are associated (or correlated) with Oriental Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Food Industries has no effect on the direction of Lyc Healthcare i.e., Lyc Healthcare and Oriental Food go up and down completely randomly.
Pair Corralation between Lyc Healthcare and Oriental Food
Assuming the 90 days trading horizon Lyc Healthcare Bhd is expected to generate 2.34 times more return on investment than Oriental Food. However, Lyc Healthcare is 2.34 times more volatile than Oriental Food Industries. It trades about 0.08 of its potential returns per unit of risk. Oriental Food Industries is currently generating about 0.04 per unit of risk. If you would invest 9.50 in Lyc Healthcare Bhd on October 24, 2024 and sell it today you would earn a total of 0.50 from holding Lyc Healthcare Bhd or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyc Healthcare Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| Lyc Healthcare Bhd |
| Oriental Food Industries |
Lyc Healthcare and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyc Healthcare and Oriental Food
The main advantage of trading using opposite Lyc Healthcare and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyc Healthcare position performs unexpectedly, Oriental Food 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 Oriental Food will offset losses from the drop in Oriental Food's long position.| Lyc Healthcare vs. IHH Healthcare Bhd | Lyc Healthcare vs. KPJ Healthcare Bhd | Lyc Healthcare vs. Pesona Metro Holdings |
| Oriental Food vs. Diversified Gateway Solutions | Oriental Food vs. CB Industrial Product | Oriental Food vs. Impiana Hotels Bhd | Oriental Food vs. Central Industrial Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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