Correlation Between FARM FRESH and Binasat Communications

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Can any of the company-specific risk be diversified away by investing in both FARM FRESH and Binasat Communications 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 FARM FRESH and Binasat Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM FRESH BERHAD and Binasat Communications Bhd, you can compare the effects of market volatilities on FARM FRESH and Binasat Communications 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 FARM FRESH with a short position of Binasat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM FRESH and Binasat Communications.

Diversification Opportunities for FARM FRESH and Binasat Communications

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between FARM and Binasat is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding FARM FRESH BERHAD and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and FARM FRESH 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 FARM FRESH BERHAD are associated (or correlated) with Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of FARM FRESH i.e., FARM FRESH and Binasat Communications go up and down completely randomly.

Pair Corralation between FARM FRESH and Binasat Communications

Assuming the 90 days trading horizon FARM FRESH BERHAD is expected to generate 0.55 times more return on investment than Binasat Communications. However, FARM FRESH BERHAD is 1.82 times less risky than Binasat Communications. It trades about 0.01 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.21 per unit of risk. If you would invest  183.00  in FARM FRESH BERHAD on October 10, 2024 and sell it today you would earn a total of  0.00  from holding FARM FRESH BERHAD or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

FARM FRESH BERHAD  vs.  Binasat Communications Bhd

 Performance 
       Timeline  
FARM FRESH BERHAD 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in FARM FRESH BERHAD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.
Binasat Communications 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Binasat Communications Bhd 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FARM FRESH and Binasat Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FARM FRESH and Binasat Communications

The main advantage of trading using opposite FARM FRESH and Binasat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM FRESH position performs unexpectedly, Binasat Communications 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 Binasat Communications will offset losses from the drop in Binasat Communications' long position.
The idea behind FARM FRESH BERHAD and Binasat Communications Bhd 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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