Correlation Between Above Food and Oriental Rise

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

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

Diversification Opportunities for Above Food and Oriental Rise

0.19

Correlation Coefficient

Above Food  Oriental Rise

Average diversification

The 3 months correlation between Above and Oriental is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Above Food Ingredients and Oriental Rise Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Rise Holdings and Above 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 Above Food Ingredients are associated (or correlated) with Oriental Rise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Rise Holdings has no effect on the direction of Above Food i.e., Above Food and Oriental Rise go up and down completely randomly.

Pair Corralation between Above Food and Oriental Rise

Assuming the 90 days horizon Above Food is expected to generate 4.83 times less return on investment than Oriental Rise. But when comparing it to its historical volatility, Above Food Ingredients is 3.47 times less risky than Oriental Rise. It trades about 0.08 of its potential returns per unit of risk. Oriental Rise Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Oriental Rise Holdings on October 3, 2024 and sell it today you would lose (447.00) from holding Oriental Rise Holdings or give up 74.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.31%
Values	Daily Returns

Above Food Ingredients  vs.  Oriental Rise Holdings

Above Food Ingredients

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Above Food Ingredients are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Above Food showed solid returns over the last few months and may actually be approaching a breakup point.

Oriental Rise Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Rise Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, Oriental Rise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Above Food and Oriental Rise

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

The idea behind Above Food Ingredients and Oriental Rise Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.