Correlation Between Farm Price and Tenaga Nasional
Can any of the company-specific risk be diversified away by investing in both Farm Price and Tenaga Nasional 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 Farm Price and Tenaga Nasional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Price Holdings and Tenaga Nasional Bhd, you can compare the effects of market volatilities on Farm Price and Tenaga Nasional 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 Farm Price with a short position of Tenaga Nasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Price and Tenaga Nasional.
Diversification Opportunities for Farm Price and Tenaga Nasional
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farm and Tenaga is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Farm Price Holdings and Tenaga Nasional Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaga Nasional Bhd and Farm Price 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 Farm Price Holdings are associated (or correlated) with Tenaga Nasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaga Nasional Bhd has no effect on the direction of Farm Price i.e., Farm Price and Tenaga Nasional go up and down completely randomly.
Pair Corralation between Farm Price and Tenaga Nasional
Assuming the 90 days trading horizon Farm Price Holdings is expected to generate 3.1 times more return on investment than Tenaga Nasional. However, Farm Price is 3.1 times more volatile than Tenaga Nasional Bhd. It trades about 0.08 of its potential returns per unit of risk. Tenaga Nasional Bhd is currently generating about 0.1 per unit of risk. If you would invest 41.00 in Farm Price Holdings on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Farm Price Holdings or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.72% |
| Values | Daily Returns |
Farm Price Holdings vs. Tenaga Nasional Bhd
Performance |
| Timeline |
| Farm Price Holdings |
| Tenaga Nasional Bhd |
Farm Price and Tenaga Nasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Price and Tenaga Nasional
The main advantage of trading using opposite Farm Price and Tenaga Nasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Price position performs unexpectedly, Tenaga Nasional 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 Tenaga Nasional will offset losses from the drop in Tenaga Nasional's long position.| Farm Price vs. Malayan Banking Bhd | Farm Price vs. Public Bank Bhd | Farm Price vs. Petronas Chemicals Group | Farm Price vs. Tenaga Nasional Bhd |
| Tenaga Nasional vs. Binasat Communications Bhd | Tenaga Nasional vs. Southern Steel Bhd | Tenaga Nasional vs. Farm Price Holdings | Tenaga Nasional vs. Sports Toto 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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