Correlation Between FARM FRESH and Binasat Communications
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
FARM FRESH BERHAD vs. Binasat Communications Bhd
Performance |
Timeline |
FARM FRESH BERHAD |
Binasat Communications |
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.FARM FRESH vs. Tex Cycle Technology | FARM FRESH vs. MClean Technologies Bhd | FARM FRESH vs. CB Industrial Product | FARM FRESH vs. ES Ceramics Technology |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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