Correlation Between Daewoo Engineering and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Daewoo Engineering 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 Daewoo Engineering and Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Engineering Construction and Foodnamoo, you can compare the effects of market volatilities on Daewoo Engineering 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 Daewoo Engineering with a short position of Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Engineering and Foodnamoo.
Diversification Opportunities for Daewoo Engineering and Foodnamoo
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Foodnamoo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Engineering Constructio and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo and Daewoo Engineering 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 Daewoo Engineering Construction 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 Daewoo Engineering i.e., Daewoo Engineering and Foodnamoo go up and down completely randomly.
Pair Corralation between Daewoo Engineering and Foodnamoo
Assuming the 90 days trading horizon Daewoo Engineering Construction is expected to generate 0.42 times more return on investment than Foodnamoo. However, Daewoo Engineering Construction is 2.35 times less risky than Foodnamoo. It trades about -0.02 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.07 per unit of risk. If you would invest 421,000 in Daewoo Engineering Construction on September 1, 2024 and sell it today you would lose (52,000) from holding Daewoo Engineering Construction or give up 12.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Engineering Constructio vs. Foodnamoo
Performance |
| Timeline |
| Daewoo Engineering |
| Foodnamoo |
Daewoo Engineering and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Engineering and Foodnamoo
The main advantage of trading using opposite Daewoo Engineering and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Engineering 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.| Daewoo Engineering vs. Korea New Network | Daewoo Engineering vs. ICD Co | Daewoo Engineering vs. DYPNF CoLtd | Daewoo Engineering vs. Busan Industrial Co |
| Foodnamoo vs. Choil Aluminum | Foodnamoo vs. PJ Metal Co | Foodnamoo vs. Youngsin Metal Industrial | Foodnamoo vs. Histeel |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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