Correlation Between Sajo Seafood and Homecast CoLtd
Can any of the company-specific risk be diversified away by investing in both Sajo Seafood and Homecast CoLtd 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 Sajo Seafood and Homecast CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sajo Seafood and Homecast CoLtd, you can compare the effects of market volatilities on Sajo Seafood and Homecast CoLtd 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 Sajo Seafood with a short position of Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sajo Seafood and Homecast CoLtd.
Diversification Opportunities for Sajo Seafood and Homecast CoLtd
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sajo and Homecast is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sajo Seafood and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast CoLtd and Sajo Seafood 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 Sajo Seafood are associated (or correlated) with Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Sajo Seafood i.e., Sajo Seafood and Homecast CoLtd go up and down completely randomly.
Pair Corralation between Sajo Seafood and Homecast CoLtd
Assuming the 90 days trading horizon Sajo Seafood is expected to generate 1.84 times more return on investment than Homecast CoLtd. However, Sajo Seafood is 1.84 times more volatile than Homecast CoLtd. It trades about 0.08 of its potential returns per unit of risk. Homecast CoLtd is currently generating about -0.13 per unit of risk. If you would invest 494,000 in Sajo Seafood on October 30, 2024 and sell it today you would earn a total of 58,000 from holding Sajo Seafood or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sajo Seafood vs. Homecast CoLtd
Performance |
| Timeline |
| Sajo Seafood |
| Homecast CoLtd |
Sajo Seafood and Homecast CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sajo Seafood and Homecast CoLtd
The main advantage of trading using opposite Sajo Seafood and Homecast CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sajo Seafood position performs unexpectedly, Homecast CoLtd 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 Homecast CoLtd will offset losses from the drop in Homecast CoLtd's long position.| Sajo Seafood vs. Busan Industrial Co | Sajo Seafood vs. Busan Ind | Sajo Seafood vs. RPBio Inc | Sajo Seafood vs. Finebesteel |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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