Correlation Between Binasat Communications and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Binasat Communications 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 Binasat Communications and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binasat Communications Bhd and Oriental Food Industries, you can compare the effects of market volatilities on Binasat Communications 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 Binasat Communications with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binasat Communications and Oriental Food.
Diversification Opportunities for Binasat Communications and Oriental Food
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Binasat and Oriental is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Binasat Communications 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 Binasat Communications 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 Binasat Communications 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 Binasat Communications i.e., Binasat Communications and Oriental Food go up and down completely randomly.
Pair Corralation between Binasat Communications and Oriental Food
Assuming the 90 days trading horizon Binasat Communications Bhd is expected to generate 1.29 times more return on investment than Oriental Food. However, Binasat Communications is 1.29 times more volatile than Oriental Food Industries. It trades about 0.09 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.07 per unit of risk. If you would invest 20.00 in Binasat Communications Bhd on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Binasat Communications Bhd or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binasat Communications Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| Binasat Communications |
| Oriental Food Industries |
Binasat Communications and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binasat Communications and Oriental Food
The main advantage of trading using opposite Binasat Communications and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binasat Communications 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.| Binasat Communications vs. Duopharma Biotech Bhd | Binasat Communications vs. ES Ceramics Technology | Binasat Communications vs. Uchi Technologies Bhd | Binasat Communications vs. Oriental Food Industries |
| Oriental Food vs. Uchi Technologies Bhd | Oriental Food vs. JF Technology BHD | Oriental Food vs. Media Prima Bhd | Oriental Food vs. PMB Technology Bhd |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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