Correlation Between Berjaya Food and Datasonic Group

Can any of the company-specific risk be diversified away by investing in both Berjaya Food and Datasonic Group 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 Datasonic Group 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 Datasonic Group Bhd, you can compare the effects of market volatilities on Berjaya Food and Datasonic Group 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 Datasonic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berjaya Food and Datasonic Group.

Diversification Opportunities for Berjaya Food and Datasonic Group

-0.12

Correlation Coefficient

Berjaya Food  Datasonic Group

Good diversification

The 3 months correlation between Berjaya and Datasonic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Food Bhd and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic Group 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 Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of Berjaya Food i.e., Berjaya Food and Datasonic Group go up and down completely randomly.

Pair Corralation between Berjaya Food and Datasonic Group

Assuming the 90 days trading horizon Berjaya Food Bhd is expected to under-perform the Datasonic Group. In addition to that, Berjaya Food is 1.93 times more volatile than Datasonic Group Bhd. It trades about -0.03 of its total potential returns per unit of risk. Datasonic Group Bhd is currently generating about -0.04 per unit of volatility. If you would invest  45.00  in Datasonic Group Bhd on September 27, 2024 and sell it today you would lose (3.00) from holding Datasonic Group Bhd or give up 6.67% of portfolio value over 90 days.

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

Berjaya Food Bhd  vs.  Datasonic Group 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 quite persistent basic indicators, Berjaya Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Datasonic Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Datasonic Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Berjaya Food and Datasonic Group

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

The idea behind Berjaya Food Bhd and Datasonic Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.