Correlation Between Oriental Food and Icon Offshore
Can any of the company-specific risk be diversified away by investing in both Oriental Food and Icon Offshore 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 Icon Offshore 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 Icon Offshore Bhd, you can compare the effects of market volatilities on Oriental Food and Icon Offshore 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 Icon Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Food and Icon Offshore.
Diversification Opportunities for Oriental Food and Icon Offshore
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oriental and Icon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Food Industries and Icon Offshore Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Offshore 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 Icon Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Offshore Bhd has no effect on the direction of Oriental Food i.e., Oriental Food and Icon Offshore go up and down completely randomly.
Pair Corralation between Oriental Food and Icon Offshore
Assuming the 90 days trading horizon Oriental Food is expected to generate 7.55 times less return on investment than Icon Offshore. But when comparing it to its historical volatility, Oriental Food Industries is 1.79 times less risky than Icon Offshore. It trades about 0.02 of its potential returns per unit of risk. Icon Offshore Bhd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Icon Offshore Bhd on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Icon Offshore Bhd or generate 74.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Oriental Food Industries vs. Icon Offshore Bhd
Performance |
| Timeline |
| Oriental Food Industries |
| Icon Offshore Bhd |
Oriental Food and Icon Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Food and Icon Offshore
The main advantage of trading using opposite Oriental Food and Icon Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Food position performs unexpectedly, Icon Offshore 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 Icon Offshore will offset losses from the drop in Icon Offshore's long position.| Oriental Food vs. Nestle Bhd | Oriental Food vs. British American Tobacco | Oriental Food vs. FARM FRESH BERHAD | Oriental Food vs. Kawan Food Bhd |
| Icon Offshore vs. MClean Technologies Bhd | Icon Offshore vs. JF Technology BHD | Icon Offshore vs. Awanbiru Technology Bhd | Icon Offshore vs. Aurelius Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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