Correlation Between Ta Ann and FARM FRESH

Can any of the company-specific risk be diversified away by investing in both Ta Ann and FARM FRESH 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 Ta Ann and FARM FRESH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ta Ann Holdings and FARM FRESH BERHAD, you can compare the effects of market volatilities on Ta Ann and FARM FRESH 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 Ta Ann with a short position of FARM FRESH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Ann and FARM FRESH.

Diversification Opportunities for Ta Ann and FARM FRESH

0.86

Correlation Coefficient

Ta Ann  FARM FRESH

Very poor diversification

The 3 months correlation between 5012 and FARM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ta Ann Holdings and FARM FRESH BERHAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM FRESH BERHAD and Ta Ann 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 Ta Ann Holdings are associated (or correlated) with FARM FRESH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM FRESH BERHAD has no effect on the direction of Ta Ann i.e., Ta Ann and FARM FRESH go up and down completely randomly.

Pair Corralation between Ta Ann and FARM FRESH

Assuming the 90 days trading horizon Ta Ann Holdings is expected to under-perform the FARM FRESH. But the stock apears to be less risky and, when comparing its historical volatility, Ta Ann Holdings is 1.29 times less risky than FARM FRESH. The stock trades about -0.07 of its potential returns per unit of risk. The FARM FRESH BERHAD is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  183.00  in FARM FRESH BERHAD on December 23, 2024 and sell it today you would lose (5.00) from holding FARM FRESH BERHAD or give up 2.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ta Ann Holdings  vs.  FARM FRESH BERHAD

Ta Ann Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ta Ann Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ta Ann is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FARM FRESH BERHAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days FARM FRESH BERHAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, FARM FRESH is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ta Ann and FARM FRESH

The main advantage of trading using opposite Ta Ann and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Ann position performs unexpectedly, FARM FRESH 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 FRESH will offset losses from the drop in FARM FRESH's long position.

The idea behind Ta Ann Holdings and FARM FRESH BERHAD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.