Correlation Between Oriental Food and Computer Forms
Can any of the company-specific risk be diversified away by investing in both Oriental Food and Computer Forms 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 Computer Forms 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 Computer Forms Bhd, you can compare the effects of market volatilities on Oriental Food and Computer Forms 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 Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and Computer Forms.
Diversification Opportunities for Oriental Food and Computer Forms
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oriental and Computer is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and Computer Forms Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Forms 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 Computer Forms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Forms Bhd has no effect on the direction of Oriental Food i.e., Oriental Food and Computer Forms go up and down completely randomly.
Pair Corralation between Oriental Food and Computer Forms
Assuming the 90 days trading horizon Oriental Food Industries is expected to generate 0.44 times more return on investment than Computer Forms. However, Oriental Food Industries is 2.29 times less risky than Computer Forms. It trades about 0.04 of its potential returns per unit of risk. Computer Forms Bhd is currently generating about -0.09 per unit of risk. If you would invest 118.00 in Oriental Food Industries on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Oriental Food Industries or generate 43.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.41% |
| Values | Daily Returns |
Oriental Food Industries vs. Computer Forms Bhd
Performance |
| Timeline |
| Oriental Food Industries |
| Computer Forms Bhd |
Oriental Food and Computer Forms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and Computer Forms
The main advantage of trading using opposite Oriental Food and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, Computer Forms 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 Computer Forms will offset losses from the drop in Computer Forms' long position.| Oriental Food vs. Shangri La Hotels | Oriental Food vs. Apex Healthcare Bhd | Oriental Food vs. Aeon Credit Service | Oriental Food vs. Impiana Hotels Bhd |
| Computer Forms vs. Digistar Bhd | Computer Forms vs. Minetech Resources Bhd | Computer Forms vs. OpenSys M Bhd | Computer Forms vs. Insas 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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