Correlation Between FOODWELL and National Plastic
Can any of the company-specific risk be diversified away by investing in both FOODWELL and National Plastic 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 FOODWELL and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and National Plastic Co, you can compare the effects of market volatilities on FOODWELL and National Plastic 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 FOODWELL with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and National Plastic.
Diversification Opportunities for FOODWELL and National Plastic
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FOODWELL and National is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and FOODWELL 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 FOODWELL Co are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of FOODWELL i.e., FOODWELL and National Plastic go up and down completely randomly.
Pair Corralation between FOODWELL and National Plastic
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 2.19 times more return on investment than National Plastic. However, FOODWELL is 2.19 times more volatile than National Plastic Co. It trades about 0.15 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.41 per unit of risk. If you would invest 502,000 in FOODWELL Co on October 30, 2024 and sell it today you would earn a total of 22,000 from holding FOODWELL Co or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. National Plastic Co
Performance |
| Timeline |
| FOODWELL |
| National Plastic |
FOODWELL and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and National Plastic
The main advantage of trading using opposite FOODWELL and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| FOODWELL vs. Shinhan Inverse Silver | FOODWELL vs. Top Material Co | FOODWELL vs. Daejoo Electronic Materials | FOODWELL vs. Ecoplastic |
| National Plastic vs. HYBE Co | National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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