Correlation Between Silver Ridge and FARM FRESH

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

Diversification Opportunities for Silver Ridge and FARM FRESH

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Silver and FARM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Silver Ridge Holdings 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 Silver Ridge 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 Silver Ridge Holdings 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 Silver Ridge i.e., Silver Ridge and FARM FRESH go up and down completely randomly.

Pair Corralation between Silver Ridge and FARM FRESH

Assuming the 90 days trading horizon Silver Ridge Holdings is expected to generate 3.65 times more return on investment than FARM FRESH. However, Silver Ridge is 3.65 times more volatile than FARM FRESH BERHAD. It trades about 0.0 of its potential returns per unit of risk. FARM FRESH BERHAD is currently generating about -0.01 per unit of risk. If you would invest  47.00  in Silver Ridge Holdings on September 26, 2024 and sell it today you would lose (2.00) from holding Silver Ridge Holdings or give up 4.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Silver Ridge Holdings  vs.  FARM FRESH BERHAD

 Performance 
       Timeline  
Silver Ridge Holdings 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Silver Ridge Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Silver Ridge disclosed solid returns over the last few months and may actually be approaching a breakup point.
FARM FRESH BERHAD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Silver Ridge and FARM FRESH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silver Ridge and FARM FRESH

The main advantage of trading using opposite Silver Ridge and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Ridge 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 Silver Ridge Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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