Correlation Between FOODWELL and Stic Investments
Can any of the company-specific risk be diversified away by investing in both FOODWELL and Stic Investments 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 Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and Stic Investments, you can compare the effects of market volatilities on FOODWELL and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and Stic Investments.
Diversification Opportunities for FOODWELL and Stic Investments
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between FOODWELL and Stic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of FOODWELL i.e., FOODWELL and Stic Investments go up and down completely randomly.
Pair Corralation between FOODWELL and Stic Investments
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 1.26 times more return on investment than Stic Investments. However, FOODWELL is 1.26 times more volatile than Stic Investments. It trades about 0.15 of its potential returns per unit of risk. Stic Investments is currently generating about -0.36 per unit of risk. If you would invest 502,000 in FOODWELL Co on October 27, 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. Stic Investments
Performance |
| Timeline |
| FOODWELL |
| Stic Investments |
FOODWELL and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and Stic Investments
The main advantage of trading using opposite FOODWELL and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| FOODWELL vs. Dgb Financial | FOODWELL vs. LG Household Healthcare | FOODWELL vs. Industrial Bank | FOODWELL vs. Jeju Bank |
| Stic Investments vs. Hyundai Engineering Construction | Stic Investments vs. Aprogen Healthcare Games | Stic Investments vs. Kyeryong Construction Industrial | Stic Investments vs. Chorokbaem Healthcare 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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