Correlation Between Genie Music and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Genie Music 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 Genie Music and Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genie Music and Foodnamoo, you can compare the effects of market volatilities on Genie Music 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 Genie Music with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Foodnamoo.
Diversification Opportunities for Genie Music and Foodnamoo
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Genie and Foodnamoo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo and Genie Music 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 Genie Music 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 Genie Music i.e., Genie Music and Foodnamoo go up and down completely randomly.
Pair Corralation between Genie Music and Foodnamoo
Assuming the 90 days trading horizon Genie Music is expected to under-perform the Foodnamoo. But the stock apears to be less risky and, when comparing its historical volatility, Genie Music is 1.12 times less risky than Foodnamoo. The stock trades about -0.27 of its potential returns per unit of risk. The Foodnamoo is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 323,000 in Foodnamoo on August 29, 2024 and sell it today you would lose (16,500) from holding Foodnamoo or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genie Music vs. Foodnamoo
Performance |
| Timeline |
| Genie Music |
| Foodnamoo |
Genie Music and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genie Music and Foodnamoo
The main advantage of trading using opposite Genie Music and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music 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.| Genie Music vs. KakaoBank Corp | Genie Music vs. Dongbang Transport Logistics | Genie Music vs. Youngsin Metal Industrial | Genie Music vs. Koryo Credit Information |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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