Correlation Between FOODWELL and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both FOODWELL and Miwon Chemical 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 Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and Miwon Chemical, you can compare the effects of market volatilities on FOODWELL and Miwon Chemical 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 Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and Miwon Chemical.
Diversification Opportunities for FOODWELL and Miwon Chemical
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FOODWELL and Miwon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical 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 Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of FOODWELL i.e., FOODWELL and Miwon Chemical go up and down completely randomly.
Pair Corralation between FOODWELL and Miwon Chemical
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 1.58 times more return on investment than Miwon Chemical. However, FOODWELL is 1.58 times more volatile than Miwon Chemical. It trades about 0.13 of its potential returns per unit of risk. Miwon Chemical is currently generating about -0.13 per unit of risk. If you would invest 510,841 in FOODWELL Co on October 25, 2024 and sell it today you would earn a total of 19,159 from holding FOODWELL Co or generate 3.75% 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. Miwon Chemical
Performance |
| Timeline |
| FOODWELL |
| Miwon Chemical |
FOODWELL and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and Miwon Chemical
The main advantage of trading using opposite FOODWELL and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| FOODWELL vs. Busan Industrial Co | FOODWELL vs. Busan Ind | FOODWELL vs. RPBio Inc | FOODWELL vs. Finebesteel |
| Miwon Chemical vs. FOODWELL Co | Miwon Chemical vs. INFINITT Healthcare Co | Miwon Chemical vs. LG Household Healthcare | Miwon Chemical vs. Sajo Seafood |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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