Correlation Between Kuala Lumpur and FARM FRESH
Can any of the company-specific risk be diversified away by investing in both Kuala Lumpur 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 Kuala Lumpur and FARM FRESH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuala Lumpur Kepong and FARM FRESH BERHAD, you can compare the effects of market volatilities on Kuala Lumpur 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 Kuala Lumpur with a short position of FARM FRESH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuala Lumpur and FARM FRESH.
Diversification Opportunities for Kuala Lumpur and FARM FRESH
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kuala and FARM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kuala Lumpur Kepong 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 Kuala Lumpur 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 Kuala Lumpur Kepong 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 Kuala Lumpur i.e., Kuala Lumpur and FARM FRESH go up and down completely randomly.
Pair Corralation between Kuala Lumpur and FARM FRESH
Assuming the 90 days trading horizon Kuala Lumpur Kepong is expected to under-perform the FARM FRESH. In addition to that, Kuala Lumpur is 1.47 times more volatile than FARM FRESH BERHAD. It trades about -0.01 of its total potential returns per unit of risk. FARM FRESH BERHAD is currently generating about 0.12 per unit of volatility. If you would invest 178.00 in FARM FRESH BERHAD on September 24, 2024 and sell it today you would earn a total of 5.00 from holding FARM FRESH BERHAD or generate 2.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Kuala Lumpur Kepong vs. FARM FRESH BERHAD
Performance |
Timeline |
Kuala Lumpur Kepong |
FARM FRESH BERHAD |
Kuala Lumpur and FARM FRESH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kuala Lumpur and FARM FRESH
The main advantage of trading using opposite Kuala Lumpur and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuala Lumpur 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.Kuala Lumpur vs. QL Resources Bhd | Kuala Lumpur vs. Keck Seng Malaysia | Kuala Lumpur vs. Saudee Group Bhd |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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