Correlation Between A Tech and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both A Tech 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 A Tech and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Tech Solution Co and FoodNamoo, you can compare the effects of market volatilities on A Tech 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 A Tech with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of A Tech and FoodNamoo.
Diversification Opportunities for A Tech and FoodNamoo
Poor diversification
The 3 months correlation between 071670 and FoodNamoo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding A Tech Solution Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and A Tech 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 A Tech Solution 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 A Tech i.e., A Tech and FoodNamoo go up and down completely randomly.
Pair Corralation between A Tech and FoodNamoo
Assuming the 90 days trading horizon A Tech Solution Co is expected to generate 0.75 times more return on investment than FoodNamoo. However, A Tech Solution Co is 1.32 times less risky than FoodNamoo. It trades about -0.01 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.05 per unit of risk. If you would invest 919,000 in A Tech Solution Co on October 11, 2024 and sell it today you would lose (300,000) from holding A Tech Solution Co or give up 32.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.82% |
| Values | Daily Returns |
A Tech Solution Co vs. FoodNamoo
Performance |
| Timeline |
| A Tech Solution |
| FoodNamoo |
A Tech and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A Tech and FoodNamoo
The main advantage of trading using opposite A Tech and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Tech 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.| A Tech vs. Hyundai Home Shopping | A Tech vs. Digital Power Communications | A Tech vs. Mobile Appliance | A Tech vs. Wireless Power Amplifier |
| FoodNamoo vs. Anam Electronics Co | FoodNamoo vs. Daewoo Electronic Components | FoodNamoo vs. Jeong Moon Information | FoodNamoo vs. Samji Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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