Correlation Between FARM FRESH and Sunzen Biotech
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Sunzen Biotech 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 FRESH and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM FRESH BERHAD and Sunzen Biotech Bhd, you can compare the effects of market volatilities on FARM FRESH and Sunzen Biotech 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 FRESH with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Sunzen Biotech.
Diversification Opportunities for FARM FRESH and Sunzen Biotech
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between FARM and Sunzen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and FARM FRESH 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 FRESH BERHAD are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of FARM FRESH i.e., FARM FRESH and Sunzen Biotech go up and down completely randomly.
Pair Corralation between FARM FRESH and Sunzen Biotech
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 1.53 times more return on investment than Sunzen Biotech. However, FARM FRESH is 1.53 times more volatile than Sunzen Biotech Bhd. It trades about 0.09 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.0 per unit of risk. If you would invest 182.00 in FARM FRESH BERHAD on September 3, 2024 and sell it today you would earn a total of 5.00 from holding FARM FRESH BERHAD or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Sunzen Biotech Bhd
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Sunzen Biotech Bhd |
FARM FRESH and Sunzen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Sunzen Biotech
The main advantage of trading using opposite FARM FRESH and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Sunzen Biotech 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 Sunzen Biotech will offset losses from the drop in Sunzen Biotech's long position.| FARM FRESH vs. British American Tobacco | FARM FRESH vs. Apollo Food Holdings | FARM FRESH vs. Oriental Food Industries |
| Sunzen Biotech vs. British American Tobacco | Sunzen Biotech vs. FARM FRESH BERHAD | Sunzen Biotech vs. Apollo Food Holdings | Sunzen Biotech vs. Oriental Food Industries |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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