Correlation Between Oriental Food and Axiata Group
Can any of the company-specific risk be diversified away by investing in both Oriental Food and Axiata Group 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 Axiata Group 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 Axiata Group Bhd, you can compare the effects of market volatilities on Oriental Food and Axiata Group 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 Axiata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and Axiata Group.
Diversification Opportunities for Oriental Food and Axiata Group
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oriental and Axiata is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and Axiata Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group 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 Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Bhd has no effect on the direction of Oriental Food i.e., Oriental Food and Axiata Group go up and down completely randomly.
Pair Corralation between Oriental Food and Axiata Group
Assuming the 90 days trading horizon Oriental Food Industries is expected to generate 1.36 times more return on investment than Axiata Group. However, Oriental Food is 1.36 times more volatile than Axiata Group Bhd. It trades about -0.05 of its potential returns per unit of risk. Axiata Group Bhd is currently generating about -0.06 per unit of risk. If you would invest 196.00 in Oriental Food Industries on September 5, 2024 and sell it today you would lose (27.00) from holding Oriental Food Industries or give up 13.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Food Industries vs. Axiata Group Bhd
Performance |
| Timeline |
| Oriental Food Industries |
| Axiata Group Bhd |
Oriental Food and Axiata Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and Axiata Group
The main advantage of trading using opposite Oriental Food and Axiata Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, Axiata Group 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 Axiata Group will offset losses from the drop in Axiata Group's long position.The idea behind Oriental Food Industries and Axiata Group Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Axiata Group vs. Petronas Chemicals Group | Axiata Group vs. YX Precious Metals | Axiata Group vs. Apollo Food Holdings | Axiata Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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