Correlation Between FARM FRESH and CIMB Group
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and CIMB Group 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 CIMB Group 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 CIMB Group Holdings, you can compare the effects of market volatilities on FARM FRESH and CIMB Group 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 CIMB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and CIMB Group.
Diversification Opportunities for FARM FRESH and CIMB Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FARM and CIMB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and CIMB Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Group 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 CIMB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Group Holdings has no effect on the direction of FARM FRESH i.e., FARM FRESH and CIMB Group go up and down completely randomly.
Pair Corralation between FARM FRESH and CIMB Group
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to under-perform the CIMB Group. In addition to that, FARM FRESH is 1.87 times more volatile than CIMB Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. CIMB Group Holdings is currently generating about 0.21 per unit of volatility. If you would invest 799.00 in CIMB Group Holdings on August 31, 2024 and sell it today you would earn a total of 26.00 from holding CIMB Group Holdings or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. CIMB Group Holdings
Performance |
| Timeline |
| FARM FRESH BERHAD |
| CIMB Group Holdings |
FARM FRESH and CIMB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and CIMB Group
The main advantage of trading using opposite FARM FRESH and CIMB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, CIMB Group 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 CIMB Group will offset losses from the drop in CIMB Group'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 |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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