Correlation Between FARM FRESH and Bank Islam
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Bank Islam 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 Bank Islam 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 Bank Islam Malaysia, you can compare the effects of market volatilities on FARM FRESH and Bank Islam 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 Bank Islam. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Bank Islam.
Diversification Opportunities for FARM FRESH and Bank Islam
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and Bank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Bank Islam Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Islam Malaysia 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 Bank Islam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Islam Malaysia has no effect on the direction of FARM FRESH i.e., FARM FRESH and Bank Islam go up and down completely randomly.
Pair Corralation between FARM FRESH and Bank Islam
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 1.57 times more return on investment than Bank Islam. However, FARM FRESH is 1.57 times more volatile than Bank Islam Malaysia. It trades about 0.09 of its potential returns per unit of risk. Bank Islam Malaysia is currently generating about -0.09 per unit of risk. If you would invest 178.00 in FARM FRESH BERHAD on October 17, 2024 and sell it today you would earn a total of 4.00 from holding FARM FRESH BERHAD or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Bank Islam Malaysia
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Bank Islam Malaysia |
FARM FRESH and Bank Islam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Bank Islam
The main advantage of trading using opposite FARM FRESH and Bank Islam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Bank Islam 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 Bank Islam will offset losses from the drop in Bank Islam's long position.| FARM FRESH vs. Rubberex M | FARM FRESH vs. YX Precious Metals | FARM FRESH vs. Sports Toto Berhad | FARM FRESH vs. Sapura Industrial Bhd |
| Bank Islam vs. Malayan Banking Bhd | Bank Islam vs. Public Bank Bhd | Bank Islam vs. Petronas Chemicals Group | Bank Islam 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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