Correlation Between CPE Technology and FARM FRESH

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

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

Diversification Opportunities for CPE Technology and FARM FRESH

0.14

Correlation Coefficient

CPE Technology  FARM FRESH

Average diversification

The 3 months correlation between CPE and FARM is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CPE Technology Berhad 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 CPE Technology 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 CPE Technology Berhad 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 CPE Technology i.e., CPE Technology and FARM FRESH go up and down completely randomly.

Pair Corralation between CPE Technology and FARM FRESH

Assuming the 90 days trading horizon CPE Technology Berhad is expected to generate 1.26 times more return on investment than FARM FRESH. However, CPE Technology is 1.26 times more volatile than FARM FRESH BERHAD. It trades about 0.09 of its potential returns per unit of risk. FARM FRESH BERHAD is currently generating about 0.0 per unit of risk. If you would invest  91.00  in CPE Technology Berhad on October 8, 2024 and sell it today you would earn a total of  2.00  from holding CPE Technology Berhad or generate 2.2% return on investment over 90 days.

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

CPE Technology Berhad  vs.  FARM FRESH BERHAD

CPE Technology Berhad

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CPE Technology Berhad are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CPE Technology 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FARM FRESH BERHAD are ranked lower than 3 (%) 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.

Pair Trading with CPE Technology and FARM FRESH

The main advantage of trading using opposite CPE Technology and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPE Technology 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 CPE Technology Berhad 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.