Correlation Between Oriental Food and YX Precious
Can any of the company-specific risk be diversified away by investing in both Oriental Food and YX Precious 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 YX Precious 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 YX Precious Metals, you can compare the effects of market volatilities on Oriental Food and YX Precious 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 YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and YX Precious.
Diversification Opportunities for Oriental Food and YX Precious
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oriental and 0250 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals 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 YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of Oriental Food i.e., Oriental Food and YX Precious go up and down completely randomly.
Pair Corralation between Oriental Food and YX Precious
Assuming the 90 days trading horizon Oriental Food Industries is expected to generate 1.33 times more return on investment than YX Precious. However, Oriental Food is 1.33 times more volatile than YX Precious Metals. It trades about -0.08 of its potential returns per unit of risk. YX Precious Metals is currently generating about -0.29 per unit of risk. If you would invest 176.00 in Oriental Food Industries on August 31, 2024 and sell it today you would lose (8.00) from holding Oriental Food Industries or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Food Industries vs. YX Precious Metals
Performance |
| Timeline |
| Oriental Food Industries |
| YX Precious Metals |
Oriental Food and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and YX Precious
The main advantage of trading using opposite Oriental Food and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.| Oriental Food vs. Nestle Bhd | Oriental Food vs. FGV Holdings Bhd | Oriental Food vs. British American Tobacco | Oriental Food vs. FARM FRESH BERHAD |
| YX Precious vs. Malayan Banking Bhd | YX Precious vs. Public Bank Bhd | YX Precious vs. Petronas Chemicals Group | YX Precious vs. Tenaga Nasional Bhd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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