Correlation Between IHH Healthcare and Oriental Food
Can any of the company-specific risk be diversified away by investing in both IHH Healthcare 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 IHH Healthcare and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IHH Healthcare Bhd and Oriental Food Industries, you can compare the effects of market volatilities on IHH Healthcare 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 IHH Healthcare with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHH Healthcare and Oriental Food.
Diversification Opportunities for IHH Healthcare and Oriental Food
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IHH and Oriental is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IHH Healthcare 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 IHH Healthcare 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 IHH Healthcare 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 IHH Healthcare i.e., IHH Healthcare and Oriental Food go up and down completely randomly.
Pair Corralation between IHH Healthcare and Oriental Food
Assuming the 90 days trading horizon IHH Healthcare Bhd is expected to generate 0.45 times more return on investment than Oriental Food. However, IHH Healthcare Bhd is 2.25 times less risky than Oriental Food. It trades about 0.14 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.05 per unit of risk. If you would invest 615.00 in IHH Healthcare Bhd on September 2, 2024 and sell it today you would earn a total of 111.00 from holding IHH Healthcare Bhd or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IHH Healthcare Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| IHH Healthcare Bhd |
| Oriental Food Industries |
IHH Healthcare and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IHH Healthcare and Oriental Food
The main advantage of trading using opposite IHH Healthcare and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHH Healthcare 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.| IHH Healthcare vs. Cloudpoint Technology Berhad | IHH Healthcare vs. Duopharma Biotech Bhd | IHH Healthcare vs. Dataprep Holdings Bhd | IHH Healthcare vs. Uchi Technologies Bhd |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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