Correlation Between Choo Bee and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Choo Bee 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 Choo Bee and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choo Bee Metal and Oriental Food Industries, you can compare the effects of market volatilities on Choo Bee 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 Choo Bee with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choo Bee and Oriental Food.
Diversification Opportunities for Choo Bee and Oriental Food
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Choo and Oriental is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Choo Bee Metal 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 Choo Bee 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 Choo Bee Metal 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 Choo Bee i.e., Choo Bee and Oriental Food go up and down completely randomly.
Pair Corralation between Choo Bee and Oriental Food
Assuming the 90 days trading horizon Choo Bee Metal is expected to under-perform the Oriental Food. But the stock apears to be less risky and, when comparing its historical volatility, Choo Bee Metal is 1.13 times less risky than Oriental Food. The stock trades about -0.33 of its potential returns per unit of risk. The Oriental Food Industries is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Oriental Food Industries on September 2, 2024 and sell it today you would lose (7.00) from holding Oriental Food Industries or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choo Bee Metal vs. Oriental Food Industries
Performance |
| Timeline |
| Choo Bee Metal |
| Oriental Food Industries |
Choo Bee and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choo Bee and Oriental Food
The main advantage of trading using opposite Choo Bee and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choo Bee 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.| Choo Bee vs. Pantech Group Holdings | Choo Bee vs. Coraza Integrated Technology | Choo Bee vs. Eonmetall Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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