Correlation Between Hanshin Construction and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction 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 Hanshin Construction and Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Foodnamoo, you can compare the effects of market volatilities on Hanshin Construction 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 Hanshin Construction with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Foodnamoo.
Diversification Opportunities for Hanshin Construction and Foodnamoo
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanshin and Foodnamoo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo and Hanshin Construction 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 Hanshin Construction Co 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 Hanshin Construction i.e., Hanshin Construction and Foodnamoo go up and down completely randomly.
Pair Corralation between Hanshin Construction and Foodnamoo
Assuming the 90 days trading horizon Hanshin Construction is expected to generate 6.3 times less return on investment than Foodnamoo. But when comparing it to its historical volatility, Hanshin Construction Co is 2.5 times less risky than Foodnamoo. It trades about 0.02 of its potential returns per unit of risk. Foodnamoo is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 253,000 in Foodnamoo on August 29, 2024 and sell it today you would earn a total of 53,500 from holding Foodnamoo or generate 21.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Foodnamoo
Performance |
| Timeline |
| Hanshin Construction |
| Foodnamoo |
Hanshin Construction and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Foodnamoo
The main advantage of trading using opposite Hanshin Construction and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction 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.| Hanshin Construction vs. Haesung Industrial Co | Hanshin Construction vs. Eagon Industrial Co | Hanshin Construction vs. Seoul Food Industrial | Hanshin Construction vs. Busan Industrial Co |
| Foodnamoo vs. Hanshin Construction Co | Foodnamoo vs. Sungdo Engineering Construction | Foodnamoo vs. Hansol Homedeco Co | Foodnamoo vs. Cuckoo Homesys Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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