Correlation Between ES Ceramics and FARM FRESH
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and FARM FRESH 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 ES Ceramics and FARM FRESH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and FARM FRESH BERHAD, you can compare the effects of market volatilities on ES Ceramics and FARM FRESH 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 ES Ceramics with a short position of FARM FRESH. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and FARM FRESH.
Diversification Opportunities for ES Ceramics and FARM FRESH
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0100 and FARM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and FARM FRESH BERHAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM FRESH BERHAD and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with FARM FRESH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM FRESH BERHAD has no effect on the direction of ES Ceramics i.e., ES Ceramics and FARM FRESH go up and down completely randomly.
Pair Corralation between ES Ceramics and FARM FRESH
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the FARM FRESH. In addition to that, ES Ceramics is 2.52 times more volatile than FARM FRESH BERHAD. It trades about -0.08 of its total potential returns per unit of risk. FARM FRESH BERHAD is currently generating about -0.03 per unit of volatility. If you would invest 182.00 in FARM FRESH BERHAD on August 31, 2024 and sell it today you would lose (2.00) from holding FARM FRESH BERHAD or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. FARM FRESH BERHAD
Performance |
| Timeline |
| ES Ceramics Technology |
| FARM FRESH BERHAD |
ES Ceramics and FARM FRESH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and FARM FRESH
The main advantage of trading using opposite ES Ceramics and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, FARM FRESH 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 FARM FRESH will offset losses from the drop in FARM FRESH's long position.| ES Ceramics vs. Binasat Communications Bhd | ES Ceramics vs. Nova Wellness Group | ES Ceramics vs. KPJ Healthcare Bhd | ES Ceramics vs. Resintech Bhd |
| FARM FRESH vs. PMB Technology Bhd | FARM FRESH vs. Uchi Technologies Bhd | FARM FRESH vs. Sunzen Biotech Bhd | FARM FRESH vs. Cloudpoint Technology Berhad |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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