Correlation Between Press Metal and Oriental Food
Can any of the company-specific risk be diversified away by investing in both Press Metal 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 Press Metal and Oriental Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Press Metal Bhd and Oriental Food Industries, you can compare the effects of market volatilities on Press Metal 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 Press Metal with a short position of Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Press Metal and Oriental Food.
Diversification Opportunities for Press Metal and Oriental Food
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Press and Oriental is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Press Metal 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 Press Metal 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 Press Metal 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 Press Metal i.e., Press Metal and Oriental Food go up and down completely randomly.
Pair Corralation between Press Metal and Oriental Food
Assuming the 90 days trading horizon Press Metal Bhd is expected to generate 0.91 times more return on investment than Oriental Food. However, Press Metal Bhd is 1.09 times less risky than Oriental Food. It trades about 0.02 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.01 per unit of risk. If you would invest 458.00 in Press Metal Bhd on November 3, 2024 and sell it today you would earn a total of 31.00 from holding Press Metal Bhd or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Press Metal Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| Press Metal Bhd |
| Oriental Food Industries |
Press Metal and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Press Metal and Oriental Food
The main advantage of trading using opposite Press Metal and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Press Metal 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.| Press Metal vs. ONETECH SOLUTIONS HOLDINGS | Press Metal vs. Malayan Banking Bhd | Press Metal vs. Petronas Chemicals Group | Press Metal vs. Cloudpoint Technology Berhad |
| Oriental Food vs. Binasat Communications Bhd | Oriental Food vs. Carlsberg Brewery Malaysia | Oriental Food vs. Sports Toto Berhad | Oriental Food vs. Sunway Construction Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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