Correlation Between Insung Information and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Insung Information and FoodNamoo 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 Insung Information and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and FoodNamoo, you can compare the effects of market volatilities on Insung Information and FoodNamoo 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 Insung Information with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and FoodNamoo.
Diversification Opportunities for Insung Information and FoodNamoo
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insung and FoodNamoo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Insung Information 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 Insung Information Co are associated (or correlated) with FoodNamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FoodNamoo has no effect on the direction of Insung Information i.e., Insung Information and FoodNamoo go up and down completely randomly.
Pair Corralation between Insung Information and FoodNamoo
Assuming the 90 days trading horizon Insung Information Co is expected to generate 1.67 times more return on investment than FoodNamoo. However, Insung Information is 1.67 times more volatile than FoodNamoo. It trades about 0.17 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.37 per unit of risk. If you would invest 174,800 in Insung Information Co on October 28, 2024 and sell it today you would earn a total of 13,500 from holding Insung Information Co or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. FoodNamoo
Performance |
| Timeline |
| Insung Information |
| FoodNamoo |
Insung Information and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and FoodNamoo
The main advantage of trading using opposite Insung Information and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, FoodNamoo 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 FoodNamoo will offset losses from the drop in FoodNamoo's long position.| Insung Information vs. Namhae Chemical | Insung Information vs. N2Tech Co | Insung Information vs. Wireless Power Amplifier | Insung Information vs. iNtRON Biotechnology |
| FoodNamoo vs. Organic Special Pet | FoodNamoo vs. Hyundai Engineering Plastics | FoodNamoo vs. Foodnamoo | FoodNamoo vs. Sempio Foods Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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