Correlation Between Korea Information and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Korea 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 Korea Information and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and FoodNamoo, you can compare the effects of market volatilities on Korea 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 Korea Information with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and FoodNamoo.
Diversification Opportunities for Korea Information and FoodNamoo
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and FoodNamoo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Korea 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 Korea Information Engineering 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 Korea Information i.e., Korea Information and FoodNamoo go up and down completely randomly.
Pair Corralation between Korea Information and FoodNamoo
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 1.54 times more return on investment than FoodNamoo. However, Korea Information is 1.54 times more volatile than FoodNamoo. It trades about 0.19 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.37 per unit of risk. If you would invest 239,000 in Korea Information Engineering on October 28, 2024 and sell it today you would earn a total of 19,000 from holding Korea Information Engineering or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Engineering vs. FoodNamoo
Performance |
| Timeline |
| Korea Information |
| FoodNamoo |
Korea Information and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and FoodNamoo
The main advantage of trading using opposite Korea Information and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea 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.| Korea Information vs. INFINITT Healthcare Co | Korea Information vs. PJ Metal Co | Korea Information vs. Infinitt Healthcare Co | Korea Information vs. Echomarketing CoLtd |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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