Correlation Between Farm Price and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both Farm Price and PIE Industrial 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 PIE Industrial 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 PIE Industrial Bhd, you can compare the effects of market volatilities on Farm Price and PIE Industrial 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Price and PIE Industrial.
Diversification Opportunities for Farm Price and PIE Industrial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farm and PIE is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Farm Price Holdings and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Farm Price i.e., Farm Price and PIE Industrial go up and down completely randomly.
Pair Corralation between Farm Price and PIE Industrial
Assuming the 90 days trading horizon Farm Price Holdings is expected to under-perform the PIE Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Farm Price Holdings is 1.41 times less risky than PIE Industrial. The stock trades about -0.22 of its potential returns per unit of risk. The PIE Industrial Bhd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 500.00 in PIE Industrial Bhd on November 4, 2024 and sell it today you would lose (37.00) from holding PIE Industrial Bhd or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Price Holdings vs. PIE Industrial Bhd
Performance |
| Timeline |
| Farm Price Holdings |
| PIE Industrial Bhd |
Farm Price and PIE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Price and PIE Industrial
The main advantage of trading using opposite Farm Price and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Price position performs unexpectedly, PIE Industrial 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 PIE Industrial will offset losses from the drop in PIE Industrial's long position.| Farm Price vs. Kluang Rubber | Farm Price vs. BP Plastics Holding | Farm Price vs. Ho Hup Construction | Farm Price vs. Greatech Technology Bhd |
| PIE Industrial vs. Kobay Tech Bhd | PIE Industrial vs. Systech Bhd | PIE Industrial vs. Radiant Globaltech Bhd | PIE Industrial vs. Pantech Group Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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