Correlation Between Berjaya Food and BP Plastics

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Can any of the company-specific risk be diversified away by investing in both Berjaya Food and BP Plastics 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 BP Plastics 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 BP Plastics Holding, you can compare the effects of market volatilities on Berjaya Food and BP Plastics 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 BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berjaya Food and BP Plastics.

Diversification Opportunities for Berjaya Food and BP Plastics

Berjaya5100Diversified AwayBerjaya5100Diversified Away100%
-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Berjaya and 5100 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Food Bhd and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding 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 BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Berjaya Food i.e., Berjaya Food and BP Plastics go up and down completely randomly.

Pair Corralation between Berjaya Food and BP Plastics

Assuming the 90 days trading horizon Berjaya Food Bhd is expected to under-perform the BP Plastics. In addition to that, Berjaya Food is 2.04 times more volatile than BP Plastics Holding. It trades about -0.27 of its total potential returns per unit of risk. BP Plastics Holding is currently generating about -0.08 per unit of volatility. If you would invest  119.00  in BP Plastics Holding on November 26, 2024 and sell it today you would lose (2.00) from holding BP Plastics Holding or give up 1.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Berjaya Food Bhd  vs.  BP Plastics Holding

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505101520
JavaScript chart by amCharts 3.21.155196 5100
       Timeline  
Berjaya Food Bhd 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Berjaya Food Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.340.360.380.40.420.440.46
BP Plastics Holding 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days BP Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BP Plastics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.161.181.21.221.241.261.281.3

Berjaya Food and BP Plastics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.75-4.3-2.86-1.42-0.0241.352.754.155.556.95 0.050.100.15
JavaScript chart by amCharts 3.21.155196 5100
       Returns  

Pair Trading with Berjaya Food and BP Plastics

The main advantage of trading using opposite Berjaya Food and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berjaya Food position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.
The idea behind Berjaya Food Bhd and BP Plastics Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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