Correlation Between Farm Price and Impiana Hotels
Can any of the company-specific risk be diversified away by investing in both Farm Price and Impiana Hotels 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 Impiana Hotels 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 Impiana Hotels Bhd, you can compare the effects of market volatilities on Farm Price and Impiana Hotels 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 Impiana Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Price and Impiana Hotels.
Diversification Opportunities for Farm Price and Impiana Hotels
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farm and Impiana is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Farm Price Holdings and Impiana Hotels Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impiana Hotels 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 Impiana Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impiana Hotels Bhd has no effect on the direction of Farm Price i.e., Farm Price and Impiana Hotels go up and down completely randomly.
Pair Corralation between Farm Price and Impiana Hotels
Assuming the 90 days trading horizon Farm Price Holdings is expected to under-perform the Impiana Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Farm Price Holdings is 1.21 times less risky than Impiana Hotels. The stock trades about -0.25 of its potential returns per unit of risk. The Impiana Hotels Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Impiana Hotels Bhd on November 8, 2024 and sell it today you would earn a total of 0.00 from holding Impiana Hotels Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Price Holdings vs. Impiana Hotels Bhd
Performance |
| Timeline |
| Farm Price Holdings |
| Impiana Hotels Bhd |
Farm Price and Impiana Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Price and Impiana Hotels
The main advantage of trading using opposite Farm Price and Impiana Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Price position performs unexpectedly, Impiana Hotels 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 Impiana Hotels will offset losses from the drop in Impiana Hotels' 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 |
| Impiana Hotels vs. Homeritz Bhd | Impiana Hotels vs. Cosmos Technology International | Impiana Hotels vs. PMB Technology Bhd | Impiana Hotels vs. CPE 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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