Correlation Between Korea Electronic and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Korea Electronic 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 Electronic and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and FoodNamoo, you can compare the effects of market volatilities on Korea Electronic 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 Electronic with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and FoodNamoo.
Diversification Opportunities for Korea Electronic and FoodNamoo
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and FoodNamoo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Korea Electronic 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 Electronic Certification 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 Electronic i.e., Korea Electronic and FoodNamoo go up and down completely randomly.
Pair Corralation between Korea Electronic and FoodNamoo
Assuming the 90 days trading horizon Korea Electronic Certification is expected to generate 0.59 times more return on investment than FoodNamoo. However, Korea Electronic Certification is 1.7 times less risky than FoodNamoo. It trades about -0.04 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.04 per unit of risk. If you would invest 480,839 in Korea Electronic Certification on September 25, 2024 and sell it today you would lose (183,839) from holding Korea Electronic Certification or give up 38.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.93% |
| Values | Daily Returns |
Korea Electronic Certification vs. FoodNamoo
Performance |
| Timeline |
| Korea Electronic Cer |
| FoodNamoo |
Korea Electronic and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and FoodNamoo
The main advantage of trading using opposite Korea Electronic and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic 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 Electronic vs. Busan Industrial Co | Korea Electronic vs. Busan Ind | Korea Electronic vs. Mirae Asset Daewoo | Korea Electronic vs. Shinhan WTI Futures |
| FoodNamoo vs. Woori Technology | FoodNamoo vs. Hwangkum Steel Technology | FoodNamoo vs. Daishin Information Communications | FoodNamoo vs. Kisan Telecom 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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