Correlation Between Homeritz Bhd and Oriental Food

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

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

Diversification Opportunities for Homeritz Bhd and Oriental Food

-0.69

Correlation Coefficient

Homeritz Bhd  Oriental Food

Excellent diversification

The 3 months correlation between Homeritz and Oriental is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Homeritz 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 Homeritz Bhd 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 Homeritz 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 Homeritz Bhd i.e., Homeritz Bhd and Oriental Food go up and down completely randomly.

Pair Corralation between Homeritz Bhd and Oriental Food

Assuming the 90 days trading horizon Homeritz Bhd is expected to generate 0.78 times more return on investment than Oriental Food. However, Homeritz Bhd is 1.28 times less risky than Oriental Food. It trades about 0.1 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.07 per unit of risk. If you would invest  54.00  in Homeritz Bhd on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Homeritz Bhd or generate 7.41% return on investment over 90 days.

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

Homeritz Bhd  vs.  Oriental Food Industries

Homeritz Bhd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Homeritz Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Homeritz Bhd may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oriental Food Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oriental Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Homeritz Bhd and Oriental Food

The main advantage of trading using opposite Homeritz Bhd and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeritz Bhd 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.

The idea behind Homeritz Bhd and Oriental Food Industries 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 CEOs Directory module to screen CEOs from public companies around the world.