Correlation Between Techfast Holdings and Berjaya Food

Can any of the company-specific risk be diversified away by investing in both Techfast Holdings and Berjaya 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 Techfast Holdings and Berjaya Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Techfast Holdings Bhd and Berjaya Food Bhd, you can compare the effects of market volatilities on Techfast Holdings and Berjaya 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 Techfast Holdings with a short position of Berjaya Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techfast Holdings and Berjaya Food.

Diversification Opportunities for Techfast Holdings and Berjaya Food

0.14

Correlation Coefficient

Techfast Holdings  Berjaya Food

Average diversification

The 3 months correlation between Techfast and Berjaya is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Techfast Holdings Bhd and Berjaya Food Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Food Bhd and Techfast Holdings 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 Techfast Holdings Bhd are associated (or correlated) with Berjaya Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Food Bhd has no effect on the direction of Techfast Holdings i.e., Techfast Holdings and Berjaya Food go up and down completely randomly.

Pair Corralation between Techfast Holdings and Berjaya Food

Assuming the 90 days trading horizon Techfast Holdings Bhd is expected to generate 1.48 times more return on investment than Berjaya Food. However, Techfast Holdings is 1.48 times more volatile than Berjaya Food Bhd. It trades about 0.05 of its potential returns per unit of risk. Berjaya Food Bhd is currently generating about -0.08 per unit of risk. If you would invest  6.50  in Techfast Holdings Bhd on October 11, 2024 and sell it today you would earn a total of  0.50  from holding Techfast Holdings Bhd or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Techfast Holdings Bhd  vs.  Berjaya Food Bhd

Techfast Holdings Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Techfast Holdings Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Techfast Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Berjaya Food Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berjaya Food Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Techfast Holdings and Berjaya Food

The main advantage of trading using opposite Techfast Holdings and Berjaya Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techfast Holdings position performs unexpectedly, Berjaya 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 Berjaya Food will offset losses from the drop in Berjaya Food's long position.

The idea behind Techfast Holdings Bhd and Berjaya Food 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.