Correlation Between FARM FRESH and Farm Price
Can any of the company-specific risk be diversified away by investing in both FARM FRESH 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 FARM FRESH and Farm Price 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 Farm Price Holdings, you can compare the effects of market volatilities on FARM FRESH 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 FARM FRESH with a short position of Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Farm Price.
Diversification Opportunities for FARM FRESH and Farm Price
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FARM and Farm is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD 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 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 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 FARM FRESH i.e., FARM FRESH and Farm Price go up and down completely randomly.
Pair Corralation between FARM FRESH and Farm Price
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 0.68 times more return on investment than Farm Price. However, FARM FRESH BERHAD is 1.47 times less risky than Farm Price. It trades about -0.03 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.04 per unit of risk. If you would invest 182.00 in FARM FRESH BERHAD on August 31, 2024 and sell it today you would lose (2.00) from holding FARM FRESH BERHAD or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Farm Price Holdings
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Farm Price Holdings |
FARM FRESH and Farm Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Farm Price
The main advantage of trading using opposite FARM FRESH and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH 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.| FARM FRESH vs. PMB Technology Bhd | FARM FRESH vs. Uchi Technologies Bhd | FARM FRESH vs. Sunzen Biotech Bhd | FARM FRESH vs. Cloudpoint Technology Berhad |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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