Correlation Between MClean Technologies and FARM FRESH
Can any of the company-specific risk be diversified away by investing in both MClean Technologies 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 MClean Technologies and FARM FRESH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MClean Technologies Bhd and FARM FRESH BERHAD, you can compare the effects of market volatilities on MClean Technologies 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 MClean Technologies with a short position of FARM FRESH. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and FARM FRESH.
Diversification Opportunities for MClean Technologies and FARM FRESH
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MClean and FARM is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd 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 MClean Technologies 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 MClean Technologies Bhd 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 MClean Technologies i.e., MClean Technologies and FARM FRESH go up and down completely randomly.
Pair Corralation between MClean Technologies and FARM FRESH
Assuming the 90 days trading horizon MClean Technologies Bhd is expected to generate 3.48 times more return on investment than FARM FRESH. However, MClean Technologies is 3.48 times more volatile than FARM FRESH BERHAD. It trades about 0.06 of its potential returns per unit of risk. FARM FRESH BERHAD is currently generating about 0.09 per unit of risk. If you would invest 30.00 in MClean Technologies Bhd on October 20, 2024 and sell it today you would earn a total of 1.00 from holding MClean Technologies Bhd or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MClean Technologies Bhd vs. FARM FRESH BERHAD
Performance |
| Timeline |
| MClean Technologies Bhd |
| FARM FRESH BERHAD |
MClean Technologies and FARM FRESH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MClean Technologies and FARM FRESH
The main advantage of trading using opposite MClean Technologies and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MClean Technologies 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.| MClean Technologies vs. CSC Steel Holdings | MClean Technologies vs. Lysaght Galvanized Steel | MClean Technologies vs. Petronas Chemicals Group | MClean Technologies vs. Binasat Communications Bhd |
| FARM FRESH vs. MClean Technologies Bhd | FARM FRESH vs. Press Metal Bhd | FARM FRESH vs. Shangri La Hotels | FARM FRESH vs. Choo Bee Metal |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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