Correlation Between Oriental Food and Insas Bhd
Can any of the company-specific risk be diversified away by investing in both Oriental Food and Insas Bhd 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 Insas Bhd 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 Insas Bhd, you can compare the effects of market volatilities on Oriental Food and Insas Bhd 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 Insas Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and Insas Bhd.
Diversification Opportunities for Oriental Food and Insas Bhd
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oriental and Insas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and Insas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insas 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 Insas Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insas Bhd has no effect on the direction of Oriental Food i.e., Oriental Food and Insas Bhd go up and down completely randomly.
Pair Corralation between Oriental Food and Insas Bhd
Assuming the 90 days trading horizon Oriental Food Industries is expected to under-perform the Insas Bhd. In addition to that, Oriental Food is 1.69 times more volatile than Insas Bhd. It trades about -0.07 of its total potential returns per unit of risk. Insas Bhd is currently generating about -0.06 per unit of volatility. If you would invest 97.00 in Insas Bhd on September 1, 2024 and sell it today you would lose (2.00) from holding Insas Bhd or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oriental Food Industries vs. Insas Bhd
Performance |
| Timeline |
| Oriental Food Industries |
| Insas Bhd |
Oriental Food and Insas Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and Insas Bhd
The main advantage of trading using opposite Oriental Food and Insas Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, Insas Bhd 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 Insas Bhd will offset losses from the drop in Insas Bhd's long position.| Oriental Food vs. British American Tobacco | Oriental Food vs. FARM FRESH BERHAD | Oriental Food vs. Apollo Food Holdings |
| Insas Bhd vs. IHH Healthcare Bhd | Insas Bhd vs. Press Metal Bhd | Insas Bhd vs. Berjaya Food Bhd | Insas Bhd vs. Oriental Food Industries |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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