Correlation Between Aeon Credit and FARM FRESH

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

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

Diversification Opportunities for Aeon Credit and FARM FRESH

0.47

Correlation Coefficient

Aeon Credit  FARM FRESH

Very weak diversification

The 3 months correlation between Aeon and FARM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service 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 Aeon Credit 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 Aeon Credit Service 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 Aeon Credit i.e., Aeon Credit and FARM FRESH go up and down completely randomly.

Pair Corralation between Aeon Credit and FARM FRESH

Assuming the 90 days trading horizon Aeon Credit Service is expected to generate 0.85 times more return on investment than FARM FRESH. However, Aeon Credit Service is 1.17 times less risky than FARM FRESH. It trades about 0.01 of its potential returns per unit of risk. FARM FRESH BERHAD is currently generating about -0.06 per unit of risk. If you would invest  622.00  in Aeon Credit Service on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Aeon Credit Service or generate 0.16% return on investment over 90 days.

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

Aeon Credit Service  vs.  FARM FRESH BERHAD

Aeon Credit Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeon Credit Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Aeon Credit 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 Aeon Credit and FARM FRESH

The main advantage of trading using opposite Aeon Credit and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Credit 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 Aeon Credit Service 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..