Correlation Between FOODWELL and HANA Micron
Can any of the company-specific risk be diversified away by investing in both FOODWELL and HANA Micron 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 HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and HANA Micron, you can compare the effects of market volatilities on FOODWELL and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and HANA Micron.
Diversification Opportunities for FOODWELL and HANA Micron
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FOODWELL and HANA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of FOODWELL i.e., FOODWELL and HANA Micron go up and down completely randomly.
Pair Corralation between FOODWELL and HANA Micron
Assuming the 90 days trading horizon FOODWELL Co is expected to under-perform the HANA Micron. But the stock apears to be less risky and, when comparing its historical volatility, FOODWELL Co is 2.44 times less risky than HANA Micron. The stock trades about -0.01 of its potential returns per unit of risk. The HANA Micron is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 890,505 in HANA Micron on September 12, 2024 and sell it today you would lose (13,505) from holding HANA Micron or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. HANA Micron
Performance |
| Timeline |
| FOODWELL |
| HANA Micron |
FOODWELL and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and HANA Micron
The main advantage of trading using opposite FOODWELL and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| FOODWELL vs. Korea New Network | FOODWELL vs. ICD Co | FOODWELL vs. DYPNF CoLtd | FOODWELL vs. Solution Advanced Technology |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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