Correlation Between SH Energy and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both SH Energy 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 SH Energy and Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Foodnamoo, you can compare the effects of market volatilities on SH Energy 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 SH Energy with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Foodnamoo.
Diversification Opportunities for SH Energy and Foodnamoo
Significant diversification
The 3 months correlation between 002360 and Foodnamoo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo and SH Energy 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 SH Energy Chemical 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 SH Energy i.e., SH Energy and Foodnamoo go up and down completely randomly.
Pair Corralation between SH Energy and Foodnamoo
Assuming the 90 days trading horizon SH Energy Chemical is expected to generate 0.58 times more return on investment than Foodnamoo. However, SH Energy Chemical is 1.71 times less risky than Foodnamoo. It trades about -0.05 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.07 per unit of risk. If you would invest 77,000 in SH Energy Chemical on November 9, 2024 and sell it today you would lose (25,500) from holding SH Energy Chemical or give up 33.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Foodnamoo
Performance |
| Timeline |
| SH Energy Chemical |
| Foodnamoo |
SH Energy and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Foodnamoo
The main advantage of trading using opposite SH Energy and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy 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.| SH Energy vs. Sempio Foods Co | SH Energy vs. Digital Power Communications | SH Energy vs. Samyang Foods Co | SH Energy vs. Lotte Data Communication |
| Foodnamoo vs. Cherrybro coLtd | Foodnamoo vs. Busan Industrial Co | Foodnamoo vs. Busan Ind | Foodnamoo vs. Mirae Asset Daewoo |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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