Correlation Between Homeritz Bhd and Farm Price

Can any of the company-specific risk be diversified away by investing in both Homeritz Bhd 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 Homeritz Bhd and Farm Price into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Homeritz Bhd and Farm Price

-0.79

Correlation Coefficient

Homeritz Bhd  Farm Price

Pay attention - limited upside

The 3 months correlation between Homeritz and Farm is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Homeritz 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 Homeritz Bhd 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 Homeritz 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 Homeritz Bhd i.e., Homeritz Bhd and Farm Price go up and down completely randomly.

Pair Corralation between Homeritz Bhd and Farm Price

Assuming the 90 days trading horizon Homeritz Bhd is expected to generate 0.88 times more return on investment than Farm Price. However, Homeritz Bhd is 1.13 times less risky than Farm Price. It trades about 0.15 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.37 per unit of risk. If you would invest  52.00  in Homeritz Bhd on December 1, 2024 and sell it today you would earn a total of  6.00  from holding Homeritz Bhd or generate 11.54% return on investment over 90 days.

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

Homeritz Bhd  vs.  Farm Price Holdings

Homeritz Bhd

Risk-Adjusted Performance

Good

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

Farm Price Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farm Price Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Homeritz Bhd and Farm Price

The main advantage of trading using opposite Homeritz Bhd and Farm Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeritz Bhd 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.

The idea behind Homeritz Bhd and Farm Price Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.