Correlation Between Berjaya Food and United Plantations

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

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

Diversification Opportunities for Berjaya Food and United Plantations

-0.76

Correlation Coefficient

Berjaya Food  United Plantations

Pay attention - limited upside

The 3 months correlation between Berjaya and United is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Food Bhd and United Plantations Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Plantations Bhd and Berjaya 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 Berjaya Food Bhd are associated (or correlated) with United Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Plantations Bhd has no effect on the direction of Berjaya Food i.e., Berjaya Food and United Plantations go up and down completely randomly.

Pair Corralation between Berjaya Food and United Plantations

Assuming the 90 days trading horizon Berjaya Food Bhd is expected to under-perform the United Plantations. In addition to that, Berjaya Food is 2.21 times more volatile than United Plantations Bhd. It trades about -0.07 of its total potential returns per unit of risk. United Plantations Bhd is currently generating about 0.19 per unit of volatility. If you would invest  1,546  in United Plantations Bhd on October 5, 2024 and sell it today you would earn a total of  1,554  from holding United Plantations Bhd or generate 100.52% return on investment over 90 days.

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

Berjaya Food Bhd  vs.  United Plantations Bhd

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.

United Plantations Bhd

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Plantations Bhd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Plantations disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berjaya Food and United Plantations

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

The idea behind Berjaya Food Bhd and United Plantations 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..