Correlation Between FARM FRESH and Al Aqar
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Al Aqar 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 Al Aqar 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 Al Aqar Healthcare, you can compare the effects of market volatilities on FARM FRESH and Al Aqar 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 Al Aqar. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Al Aqar.
Diversification Opportunities for FARM FRESH and Al Aqar
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FARM and 5116 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare 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 Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of FARM FRESH i.e., FARM FRESH and Al Aqar go up and down completely randomly.
Pair Corralation between FARM FRESH and Al Aqar
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 1.23 times more return on investment than Al Aqar. However, FARM FRESH is 1.23 times more volatile than Al Aqar Healthcare. It trades about 0.09 of its potential returns per unit of risk. Al Aqar Healthcare is currently generating about 0.01 per unit of risk. If you would invest 180.00 in FARM FRESH BERHAD on October 20, 2024 and sell it today you would earn a total of 4.00 from holding FARM FRESH BERHAD or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Al Aqar Healthcare
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Al Aqar Healthcare |
FARM FRESH and Al Aqar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Al Aqar
The main advantage of trading using opposite FARM FRESH and Al Aqar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Al Aqar 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 Al Aqar will offset losses from the drop in Al Aqar's long position.| FARM FRESH vs. MClean Technologies Bhd | FARM FRESH vs. Press Metal Bhd | FARM FRESH vs. Shangri La Hotels | FARM FRESH vs. Choo Bee Metal |
| Al Aqar vs. PMB Technology Bhd | Al Aqar vs. Cosmos Technology International | Al Aqar vs. CPE Technology Berhad | Al Aqar vs. Icon Offshore 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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