Correlation Between FARM FRESH and RHB Bank
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and RHB Bank 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 RHB Bank 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 RHB Bank Bhd, you can compare the effects of market volatilities on FARM FRESH and RHB Bank 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 RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and RHB Bank.
Diversification Opportunities for FARM FRESH and RHB Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FARM and RHB is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and RHB Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHB Bank 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 RHB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHB Bank Bhd has no effect on the direction of FARM FRESH i.e., FARM FRESH and RHB Bank go up and down completely randomly.
Pair Corralation between FARM FRESH and RHB Bank
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 2.29 times more return on investment than RHB Bank. However, FARM FRESH is 2.29 times more volatile than RHB Bank Bhd. It trades about 0.08 of its potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.15 per unit of risk. If you would invest 127.00 in FARM FRESH BERHAD on September 2, 2024 and sell it today you would earn a total of 60.00 from holding FARM FRESH BERHAD or generate 47.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. RHB Bank Bhd
Performance |
| Timeline |
| FARM FRESH BERHAD |
| RHB Bank Bhd |
FARM FRESH and RHB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and RHB Bank
The main advantage of trading using opposite FARM FRESH and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, RHB Bank 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 RHB Bank will offset losses from the drop in RHB Bank's long position.| FARM FRESH vs. Kluang Rubber | FARM FRESH vs. Choo Bee Metal | FARM FRESH vs. TAS Offshore Bhd | FARM FRESH vs. YX Precious Metals |
| RHB Bank vs. TAS Offshore Bhd | RHB Bank vs. Greatech Technology Bhd | RHB Bank vs. Choo Bee Metal | RHB Bank vs. Cloudpoint 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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