Correlation Between PPB Group and Oriental Food
Can any of the company-specific risk be diversified away by investing in both PPB Group 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 PPB Group and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPB Group Bhd and Oriental Food Industries, you can compare the effects of market volatilities on PPB Group 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 PPB Group with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPB Group and Oriental Food.
Diversification Opportunities for PPB Group and Oriental Food
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPB and Oriental is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group 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 PPB Group 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 PPB Group 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 PPB Group i.e., PPB Group and Oriental Food go up and down completely randomly.
Pair Corralation between PPB Group and Oriental Food
Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the Oriental Food. But the stock apears to be less risky and, when comparing its historical volatility, PPB Group Bhd is 2.23 times less risky than Oriental Food. The stock trades about -0.04 of its potential returns per unit of risk. The Oriental Food Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 113.00 in Oriental Food Industries on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Oriental Food Industries or generate 46.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.53% |
| Values | Daily Returns |
PPB Group Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| PPB Group Bhd |
| Oriental Food Industries |
PPB Group and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPB Group and Oriental Food
The main advantage of trading using opposite PPB Group and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group 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.| PPB Group vs. British American Tobacco | PPB Group vs. FARM FRESH BERHAD | PPB Group vs. Apollo Food Holdings |
| Oriental Food vs. British American Tobacco | Oriental Food vs. FARM FRESH BERHAD | Oriental Food vs. Apollo Food Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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