Correlation Between Kawan Food and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Kawan Food and Oriental Food 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 Kawan Food and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawan Food Bhd and Oriental Food Industries, you can compare the effects of market volatilities on Kawan Food and Oriental Food 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 Kawan Food with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Oriental Food.
Diversification Opportunities for Kawan Food and Oriental Food
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kawan and Oriental is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd and Oriental Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Food Industries and Kawan 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 Kawan Food Bhd are associated (or correlated) with Oriental Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Food Industries has no effect on the direction of Kawan Food i.e., Kawan Food and Oriental Food go up and down completely randomly.
Pair Corralation between Kawan Food and Oriental Food
Assuming the 90 days trading horizon Kawan Food Bhd is expected to generate 0.56 times more return on investment than Oriental Food. However, Kawan Food Bhd is 1.79 times less risky than Oriental Food. It trades about -0.05 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.06 per unit of risk. If you would invest 165.00 in Kawan Food Bhd on October 26, 2024 and sell it today you would lose (4.00) from holding Kawan Food Bhd or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawan Food Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| Kawan Food Bhd |
| Oriental Food Industries |
Kawan Food and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawan Food and Oriental Food
The main advantage of trading using opposite Kawan Food and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food position performs unexpectedly, Oriental Food 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 Oriental Food will offset losses from the drop in Oriental Food's long position.| Kawan Food vs. KPJ Healthcare Bhd | Kawan Food vs. CSC Steel Holdings | Kawan Food vs. Shangri La Hotels | Kawan Food vs. Kluang Rubber |
| Oriental Food vs. Senheng New Retail | Oriental Food vs. Ho Hup Construction | Oriental Food vs. Lotte Chemical Titan | Oriental Food vs. Choo Bee Metal |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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