Correlation Between PPB Group and FARM FRESH

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

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

Diversification Opportunities for PPB Group and FARM FRESH

-0.16

Correlation Coefficient

PPB Group  FARM FRESH

Good diversification

The 3 months correlation between PPB and FARM is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PPB Group Bhd 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 PPB Group 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 PPB Group Bhd 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 PPB Group i.e., PPB Group and FARM FRESH go up and down completely randomly.

Pair Corralation between PPB Group and FARM FRESH

Assuming the 90 days trading horizon PPB Group Bhd is expected to under-perform the FARM FRESH. But the stock apears to be less risky and, when comparing its historical volatility, PPB Group Bhd is 1.19 times less risky than FARM FRESH. The stock trades about -0.05 of its potential returns per unit of risk. The FARM FRESH BERHAD is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  130.00  in FARM FRESH BERHAD on September 24, 2024 and sell it today you would earn a total of  52.00  from holding FARM FRESH BERHAD or generate 40.0% return on investment over 90 days.

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

PPB Group Bhd  vs.  FARM FRESH BERHAD

PPB Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPB Group 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FARM FRESH BERHAD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FARM FRESH BERHAD are ranked lower than 5 (%) 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 PPB Group and FARM FRESH

The main advantage of trading using opposite PPB Group and FARM FRESH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPB Group 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 PPB Group Bhd 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.