Correlation Between FarmStory and NHN KCP
Can any of the company-specific risk be diversified away by investing in both FarmStory and NHN KCP 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 FarmStory and NHN KCP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and NHN KCP Corp, you can compare the effects of market volatilities on FarmStory and NHN KCP 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 FarmStory with a short position of NHN KCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and NHN KCP.
Diversification Opportunities for FarmStory and NHN KCP
Poor diversification
The 3 months correlation between FarmStory and NHN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and NHN KCP Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NHN KCP Corp and FarmStory 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 FarmStory Co are associated (or correlated) with NHN KCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NHN KCP Corp has no effect on the direction of FarmStory i.e., FarmStory and NHN KCP go up and down completely randomly.
Pair Corralation between FarmStory and NHN KCP
Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the NHN KCP. But the stock apears to be less risky and, when comparing its historical volatility, FarmStory Co is 1.1 times less risky than NHN KCP. The stock trades about -0.19 of its potential returns per unit of risk. The NHN KCP Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 760,000 in NHN KCP Corp on August 29, 2024 and sell it today you would earn a total of 23,000 from holding NHN KCP Corp or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarmStory Co vs. NHN KCP Corp
Performance |
| Timeline |
| FarmStory |
| NHN KCP Corp |
FarmStory and NHN KCP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and NHN KCP
The main advantage of trading using opposite FarmStory and NHN KCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, NHN KCP 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 NHN KCP will offset losses from the drop in NHN KCP's long position.| FarmStory vs. Samsung Electronics Co | FarmStory vs. Samsung Electronics Co | FarmStory vs. Hyundai Motor Co | FarmStory vs. Hyundai Motor |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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