Correlation Between Choo Bee and Farm Price
Can any of the company-specific risk be diversified away by investing in both Choo Bee and Farm Price 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 Choo Bee and Farm Price into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choo Bee Metal and Farm Price Holdings, you can compare the effects of market volatilities on Choo Bee and Farm Price 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 Choo Bee with a short position of Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choo Bee and Farm Price.
Diversification Opportunities for Choo Bee and Farm Price
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choo and Farm is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Choo Bee Metal and Farm Price Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Price Holdings and Choo Bee 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 Choo Bee Metal are associated (or correlated) with Farm Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Price Holdings has no effect on the direction of Choo Bee i.e., Choo Bee and Farm Price go up and down completely randomly.
Pair Corralation between Choo Bee and Farm Price
Assuming the 90 days trading horizon Choo Bee Metal is expected to under-perform the Farm Price. But the stock apears to be less risky and, when comparing its historical volatility, Choo Bee Metal is 1.88 times less risky than Farm Price. The stock trades about -0.03 of its potential returns per unit of risk. The Farm Price Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Farm Price Holdings on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Farm Price Holdings or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 39.13% |
| Values | Daily Returns |
Choo Bee Metal vs. Farm Price Holdings
Performance |
| Timeline |
| Choo Bee Metal |
| Farm Price Holdings |
Choo Bee and Farm Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choo Bee and Farm Price
The main advantage of trading using opposite Choo Bee and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choo Bee position performs unexpectedly, Farm Price 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 Farm Price will offset losses from the drop in Farm Price's long position.| Choo Bee vs. Supercomnet Technologies Bhd | Choo Bee vs. Magni Tech Industries | Choo Bee vs. Sunzen Biotech Bhd | Choo Bee vs. ES Ceramics Technology |
| Farm Price vs. Malayan Banking Bhd | Farm Price vs. Public Bank Bhd | Farm Price vs. Petronas Chemicals Group | Farm Price 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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