Correlation Between OSK Holdings and FARM FRESH

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

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

Diversification Opportunities for OSK Holdings and FARM FRESH

0.02

Correlation Coefficient

OSK Holdings  FARM FRESH

Significant diversification

The 3 months correlation between OSK and FARM is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding OSK Holdings Bhd 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 OSK Holdings 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 OSK Holdings Bhd 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 OSK Holdings i.e., OSK Holdings and FARM FRESH go up and down completely randomly.

Pair Corralation between OSK Holdings and FARM FRESH

Assuming the 90 days trading horizon OSK Holdings Bhd is expected to generate 1.2 times more return on investment than FARM FRESH. However, OSK Holdings is 1.2 times more volatile than FARM FRESH BERHAD. It trades about 0.32 of its potential returns per unit of risk. FARM FRESH BERHAD is currently generating about 0.09 per unit of risk. If you would invest  161.00  in OSK Holdings Bhd on September 27, 2024 and sell it today you would earn a total of  17.00  from holding OSK Holdings Bhd or generate 10.56% return on investment over 90 days.

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

OSK Holdings Bhd  vs.  FARM FRESH BERHAD

OSK Holdings Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSK Holdings Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, OSK Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FARM FRESH BERHAD

Risk-Adjusted Performance

0 of 100

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 OSK Holdings and FARM FRESH

The main advantage of trading using opposite OSK Holdings and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSK Holdings 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 OSK Holdings Bhd 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.