Correlation Between FOODWELL and Poongsan
Can any of the company-specific risk be diversified away by investing in both FOODWELL and Poongsan 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 Poongsan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and Poongsan, you can compare the effects of market volatilities on FOODWELL and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and Poongsan.
Diversification Opportunities for FOODWELL and Poongsan
Modest diversification
The 3 months correlation between FOODWELL and Poongsan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of FOODWELL i.e., FOODWELL and Poongsan go up and down completely randomly.
Pair Corralation between FOODWELL and Poongsan
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.68 times more return on investment than Poongsan. However, FOODWELL Co is 1.46 times less risky than Poongsan. It trades about 0.04 of its potential returns per unit of risk. Poongsan is currently generating about -0.01 per unit of risk. If you would invest 457,301 in FOODWELL Co on October 14, 2024 and sell it today you would earn a total of 53,699 from holding FOODWELL Co or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. Poongsan
Performance |
| Timeline |
| FOODWELL |
| Poongsan |
FOODWELL and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and Poongsan
The main advantage of trading using opposite FOODWELL and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| FOODWELL vs. Kisan Telecom Co | FOODWELL vs. SKONEC Entertainment Co | FOODWELL vs. Korean Drug Co | FOODWELL vs. Cube Entertainment |
| Poongsan vs. Cuckoo Homesys Co | Poongsan vs. Foodnamoo | Poongsan vs. FOODWELL Co | Poongsan vs. Sam Yang Foods |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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