Correlation Between Oriental Food and MClean Technologies
Can any of the company-specific risk be diversified away by investing in both Oriental Food and MClean Technologies 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 Oriental Food and MClean Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Food Industries and MClean Technologies Bhd, you can compare the effects of market volatilities on Oriental Food and MClean Technologies 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 Oriental Food with a short position of MClean Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and MClean Technologies.
Diversification Opportunities for Oriental Food and MClean Technologies
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oriental and MClean is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and MClean Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MClean Technologies Bhd and Oriental 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 Oriental Food Industries are associated (or correlated) with MClean Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MClean Technologies Bhd has no effect on the direction of Oriental Food i.e., Oriental Food and MClean Technologies go up and down completely randomly.
Pair Corralation between Oriental Food and MClean Technologies
Assuming the 90 days trading horizon Oriental Food is expected to generate 2.51 times less return on investment than MClean Technologies. But when comparing it to its historical volatility, Oriental Food Industries is 2.46 times less risky than MClean Technologies. It trades about 0.04 of its potential returns per unit of risk. MClean Technologies Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18.00 in MClean Technologies Bhd on November 1, 2024 and sell it today you would earn a total of 10.00 from holding MClean Technologies Bhd or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.54% |
| Values | Daily Returns |
Oriental Food Industries vs. MClean Technologies Bhd
Performance |
| Timeline |
| Oriental Food Industries |
| MClean Technologies Bhd |
Oriental Food and MClean Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and MClean Technologies
The main advantage of trading using opposite Oriental Food and MClean Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, MClean Technologies 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 MClean Technologies will offset losses from the drop in MClean Technologies' long position.| Oriental Food vs. Binasat Communications Bhd | Oriental Food vs. Press Metal Bhd | Oriental Food vs. Central Industrial Corp | Oriental Food vs. Lotte Chemical Titan |
| MClean Technologies vs. Alliance Financial Group | MClean Technologies vs. Oriental Food Industries | MClean Technologies vs. Farm Price Holdings | MClean Technologies vs. Leader Steel 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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