Correlation Between Sam Chun and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Sam Chun and Foodnamoo 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 Sam Chun and Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Chun Dang and Foodnamoo, you can compare the effects of market volatilities on Sam Chun and Foodnamoo 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 Sam Chun with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Chun and Foodnamoo.
Diversification Opportunities for Sam Chun and Foodnamoo
Poor diversification
The 3 months correlation between Sam and Foodnamoo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sam Chun Dang and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo and Sam Chun 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 Sam Chun Dang are associated (or correlated) with Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Sam Chun i.e., Sam Chun and Foodnamoo go up and down completely randomly.
Pair Corralation between Sam Chun and Foodnamoo
Assuming the 90 days trading horizon Sam Chun Dang is expected to generate 1.24 times more return on investment than Foodnamoo. However, Sam Chun is 1.24 times more volatile than Foodnamoo. It trades about 0.05 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.05 per unit of risk. If you would invest 4,675,000 in Sam Chun Dang on September 12, 2024 and sell it today you would earn a total of 5,125,000 from holding Sam Chun Dang or generate 109.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Chun Dang vs. Foodnamoo
Performance |
| Timeline |
| Sam Chun Dang |
| Foodnamoo |
Sam Chun and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Chun and Foodnamoo
The main advantage of trading using opposite Sam Chun and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Chun position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.The idea behind Sam Chun Dang and Foodnamoo 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.| Foodnamoo vs. Solution Advanced Technology | Foodnamoo vs. Busan Industrial Co | Foodnamoo vs. Busan Ind | Foodnamoo vs. Sam Chun Dang |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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