Correlation Between Kawan Food and Farm Price
Can any of the company-specific risk be diversified away by investing in both Kawan Food 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 Kawan Food and Farm Price into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawan Food Bhd and Farm Price Holdings, you can compare the effects of market volatilities on Kawan Food 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 Kawan Food with a short position of Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawan Food and Farm Price.
Diversification Opportunities for Kawan Food and Farm Price
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kawan and Farm is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kawan Food Bhd 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 Kawan Food 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 Kawan Food Bhd 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 Kawan Food i.e., Kawan Food and Farm Price go up and down completely randomly.
Pair Corralation between Kawan Food and Farm Price
Assuming the 90 days trading horizon Kawan Food Bhd is expected to generate 0.47 times more return on investment than Farm Price. However, Kawan Food Bhd is 2.13 times less risky than Farm Price. It trades about 0.0 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.03 per unit of risk. If you would invest 168.00 in Kawan Food Bhd on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Kawan Food Bhd or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kawan Food Bhd vs. Farm Price Holdings
Performance |
| Timeline |
| Kawan Food Bhd |
| Farm Price Holdings |
Kawan Food and Farm Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawan Food and Farm Price
The main advantage of trading using opposite Kawan Food and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawan Food 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.| Kawan Food vs. PMB Technology Bhd | Kawan Food vs. Greatech Technology Bhd | Kawan Food vs. ES Ceramics Technology | Kawan Food vs. Computer Forms Bhd |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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