Correlation Between KPJ Healthcare and Oriental Food
Can any of the company-specific risk be diversified away by investing in both KPJ 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 KPJ 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 KPJ Healthcare Bhd and Oriental Food Industries, you can compare the effects of market volatilities on KPJ 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 KPJ Healthcare with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPJ Healthcare and Oriental Food.
Diversification Opportunities for KPJ Healthcare and Oriental Food
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KPJ and Oriental is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding KPJ 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 KPJ 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 KPJ 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 KPJ Healthcare i.e., KPJ Healthcare and Oriental Food go up and down completely randomly.
Pair Corralation between KPJ Healthcare and Oriental Food
Assuming the 90 days trading horizon KPJ Healthcare Bhd is expected to under-perform the Oriental Food. But the stock apears to be less risky and, when comparing its historical volatility, KPJ Healthcare Bhd is 1.17 times less risky than Oriental Food. The stock trades about -0.16 of its potential returns per unit of risk. The Oriental Food Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Oriental Food Industries on October 23, 2024 and sell it today you would lose (2.00) from holding Oriental Food Industries or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPJ Healthcare Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| KPJ Healthcare Bhd |
| Oriental Food Industries |
KPJ Healthcare and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPJ Healthcare and Oriental Food
The main advantage of trading using opposite KPJ Healthcare and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPJ 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.| KPJ Healthcare vs. Cloudpoint Technology Berhad | KPJ Healthcare vs. Kluang Rubber | KPJ Healthcare vs. CPE Technology Berhad | KPJ Healthcare vs. Petronas Chemicals Group |
| Oriental Food vs. KPJ Healthcare Bhd | Oriental Food vs. Choo Bee Metal | Oriental Food vs. ONETECH SOLUTIONS HOLDINGS | Oriental Food vs. YX Precious Metals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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