Correlation Between Malayan Banking and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Malayan Banking 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 Malayan Banking and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and Oriental Food Industries, you can compare the effects of market volatilities on Malayan Banking 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 Malayan Banking with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Oriental Food.
Diversification Opportunities for Malayan Banking and Oriental Food
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Malayan and Oriental is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking 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 Malayan Banking 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 Malayan Banking 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 Malayan Banking i.e., Malayan Banking and Oriental Food go up and down completely randomly.
Pair Corralation between Malayan Banking and Oriental Food
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to generate 0.36 times more return on investment than Oriental Food. However, Malayan Banking Bhd is 2.77 times less risky than Oriental Food. It trades about 0.06 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.03 per unit of risk. If you would invest 1,006 in Malayan Banking Bhd on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Malayan Banking Bhd or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| Malayan Banking Bhd |
| Oriental Food Industries |
Malayan Banking and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Oriental Food
The main advantage of trading using opposite Malayan Banking and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking 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.| Malayan Banking vs. Public Bank Bhd | Malayan Banking vs. Eonmetall Group Bhd | Malayan Banking vs. Bank Islam Malaysia | Malayan Banking vs. Awanbiru Technology Bhd |
| Oriental Food vs. SSF Home Group | Oriental Food vs. Kluang Rubber | Oriental Food vs. Riverview Rubber Estates | Oriental Food vs. Homeritz 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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