Correlation Between Malayan Banking and Farm Price
Can any of the company-specific risk be diversified away by investing in both Malayan Banking and Farm Price 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 Malayan Banking and Farm Price into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malayan Banking Bhd and Farm Price Holdings, you can compare the effects of market volatilities on Malayan Banking and Farm Price 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 Malayan Banking with a short position of Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malayan Banking and Farm Price.
Diversification Opportunities for Malayan Banking and Farm Price
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malayan and Farm is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Malayan Banking Bhd and Farm Price Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Price Holdings and Malayan Banking 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 Malayan Banking Bhd are associated (or correlated) with Farm Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Price Holdings has no effect on the direction of Malayan Banking i.e., Malayan Banking and Farm Price go up and down completely randomly.
Pair Corralation between Malayan Banking and Farm Price
Assuming the 90 days trading horizon Malayan Banking Bhd is expected to under-perform the Farm Price. But the stock apears to be less risky and, when comparing its historical volatility, Malayan Banking Bhd is 2.59 times less risky than Farm Price. The stock trades about -0.12 of its potential returns per unit of risk. The Farm Price Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Farm Price Holdings on August 27, 2024 and sell it today you would lose (1.00) from holding Farm Price Holdings or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malayan Banking Bhd vs. Farm Price Holdings
Performance |
| Timeline |
| Malayan Banking Bhd |
| Farm Price Holdings |
Malayan Banking and Farm Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malayan Banking and Farm Price
The main advantage of trading using opposite Malayan Banking and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malayan Banking position performs unexpectedly, Farm Price 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 Price will offset losses from the drop in Farm Price's long position.| Malayan Banking vs. Cengild Medical Berhad | Malayan Banking vs. YX Precious Metals | Malayan Banking vs. Melewar Industrial Group | Malayan Banking vs. Petronas Chemicals Group |
| Farm Price vs. Malayan Banking Bhd | Farm Price vs. Public Bank Bhd | Farm Price vs. Petronas Chemicals Group | Farm Price vs. Tenaga Nasional Bhd |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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