Correlation Between SFP Tech and Oriental Food
Can any of the company-specific risk be diversified away by investing in both SFP Tech 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 SFP Tech and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFP Tech Holdings and Oriental Food Industries, you can compare the effects of market volatilities on SFP Tech 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 SFP Tech with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Oriental Food.
Diversification Opportunities for SFP Tech and Oriental Food
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SFP and Oriental is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings 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 SFP Tech 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 SFP Tech Holdings 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 SFP Tech i.e., SFP Tech and Oriental Food go up and down completely randomly.
Pair Corralation between SFP Tech and Oriental Food
Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Oriental Food. In addition to that, SFP Tech is 1.15 times more volatile than Oriental Food Industries. It trades about -0.01 of its total potential returns per unit of risk. Oriental Food Industries is currently generating about 0.07 per unit of volatility. If you would invest 102.00 in Oriental Food Industries on August 31, 2024 and sell it today you would earn a total of 66.00 from holding Oriental Food Industries or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.9% |
| Values | Daily Returns |
SFP Tech Holdings vs. Oriental Food Industries
Performance |
| Timeline |
| SFP Tech Holdings |
| Oriental Food Industries |
SFP Tech and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFP Tech and Oriental Food
The main advantage of trading using opposite SFP Tech and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech 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.| SFP Tech vs. Scientex Packaging | SFP Tech vs. UNIQUE | SFP Tech vs. Dnonce Tech Bhd | SFP Tech vs. Protasco Bhd |
| Oriental Food vs. Nestle Bhd | Oriental Food vs. PPB Group Bhd | Oriental Food vs. IOI Bhd | Oriental Food vs. FGV Holdings 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 Stocks Directory module to find actively traded stocks across global markets.
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