Correlation Between Berjaya Food and Sungei Bagan
Can any of the company-specific risk be diversified away by investing in both Berjaya Food and Sungei Bagan 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 Berjaya Food and Sungei Bagan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berjaya Food Bhd and Sungei Bagan Rubber, you can compare the effects of market volatilities on Berjaya Food and Sungei Bagan 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 Berjaya Food with a short position of Sungei Bagan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berjaya Food and Sungei Bagan.
Diversification Opportunities for Berjaya Food and Sungei Bagan
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berjaya and Sungei is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Food Bhd and Sungei Bagan Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungei Bagan Rubber and Berjaya Food 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 Berjaya Food Bhd are associated (or correlated) with Sungei Bagan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungei Bagan Rubber has no effect on the direction of Berjaya Food i.e., Berjaya Food and Sungei Bagan go up and down completely randomly.
Pair Corralation between Berjaya Food and Sungei Bagan
Assuming the 90 days trading horizon Berjaya Food Bhd is expected to generate 7.99 times more return on investment than Sungei Bagan. However, Berjaya Food is 7.99 times more volatile than Sungei Bagan Rubber. It trades about -0.04 of its potential returns per unit of risk. Sungei Bagan Rubber is currently generating about -0.62 per unit of risk. If you would invest 42.00 in Berjaya Food Bhd on August 30, 2024 and sell it today you would lose (3.00) from holding Berjaya Food Bhd or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Berjaya Food Bhd vs. Sungei Bagan Rubber
Performance |
| Timeline |
| Berjaya Food Bhd |
| Sungei Bagan Rubber |
Berjaya Food and Sungei Bagan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berjaya Food and Sungei Bagan
The main advantage of trading using opposite Berjaya Food and Sungei Bagan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berjaya Food position performs unexpectedly, Sungei Bagan 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 Sungei Bagan will offset losses from the drop in Sungei Bagan's long position.| Berjaya Food vs. Shangri La Hotels | Berjaya Food vs. Minetech Resources Bhd | Berjaya Food vs. Sunzen Biotech Bhd | Berjaya Food vs. ViTrox Bhd |
| Sungei Bagan vs. Pantech Group Holdings | Sungei Bagan vs. Malayan Banking Bhd | Sungei Bagan vs. Datasonic Group Bhd | Sungei Bagan vs. Press Metal 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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