Correlation Between FARM FRESH and Aeon Credit
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Aeon Credit 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 Aeon Credit 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 Aeon Credit Service, you can compare the effects of market volatilities on FARM FRESH and Aeon Credit 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 Aeon Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Aeon Credit.
Diversification Opportunities for FARM FRESH and Aeon Credit
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and Aeon is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Aeon Credit Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Credit Service 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 Aeon Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Credit Service has no effect on the direction of FARM FRESH i.e., FARM FRESH and Aeon Credit go up and down completely randomly.
Pair Corralation between FARM FRESH and Aeon Credit
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 1.59 times more return on investment than Aeon Credit. However, FARM FRESH is 1.59 times more volatile than Aeon Credit Service. It trades about -0.07 of its potential returns per unit of risk. Aeon Credit Service is currently generating about -0.13 per unit of risk. If you would invest 183.00 in FARM FRESH BERHAD on August 28, 2024 and sell it today you would lose (4.00) from holding FARM FRESH BERHAD or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Aeon Credit Service
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Aeon Credit Service |
FARM FRESH and Aeon Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Aeon Credit
The main advantage of trading using opposite FARM FRESH and Aeon Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Aeon Credit 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 Aeon Credit will offset losses from the drop in Aeon Credit's long position.| FARM FRESH vs. SSF Home Group | FARM FRESH vs. Melewar Industrial Group | FARM FRESH vs. KPJ Healthcare Bhd | FARM FRESH vs. Al Aqar Healthcare |
| Aeon Credit vs. Digistar Bhd | Aeon Credit vs. Minetech Resources Bhd | Aeon Credit vs. OpenSys M Bhd | Aeon Credit vs. Insas 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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