Correlation Between FARM FRESH and Resintech Bhd
Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Resintech Bhd 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 Resintech Bhd 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 Resintech Bhd, you can compare the effects of market volatilities on FARM FRESH and Resintech Bhd 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 Resintech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Resintech Bhd.
Diversification Opportunities for FARM FRESH and Resintech Bhd
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FARM and Resintech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Resintech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resintech 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 Resintech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resintech Bhd has no effect on the direction of FARM FRESH i.e., FARM FRESH and Resintech Bhd go up and down completely randomly.
Pair Corralation between FARM FRESH and Resintech Bhd
Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 0.78 times more return on investment than Resintech Bhd. However, FARM FRESH BERHAD is 1.29 times less risky than Resintech Bhd. It trades about -0.03 of its potential returns per unit of risk. Resintech Bhd is currently generating about -0.16 per unit of risk. If you would invest 182.00 in FARM FRESH BERHAD on August 31, 2024 and sell it today you would lose (2.00) from holding FARM FRESH BERHAD or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM FRESH BERHAD vs. Resintech Bhd
Performance |
| Timeline |
| FARM FRESH BERHAD |
| Resintech Bhd |
FARM FRESH and Resintech Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM FRESH and Resintech Bhd
The main advantage of trading using opposite FARM FRESH and Resintech Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Resintech Bhd 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 Resintech Bhd will offset losses from the drop in Resintech Bhd'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 |
| Resintech Bhd vs. Digistar Bhd | Resintech Bhd vs. Minetech Resources Bhd | Resintech Bhd vs. Swift Haulage Bhd | Resintech Bhd vs. Bina Darulaman 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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