Correlation Between Wave Electronics and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Wave Electronics 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 Wave Electronics and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Electronics Co and FoodNamoo, you can compare the effects of market volatilities on Wave Electronics 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 Wave Electronics with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and FoodNamoo.
Diversification Opportunities for Wave Electronics and FoodNamoo
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wave and FoodNamoo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Wave Electronics 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 Wave Electronics 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 Wave Electronics i.e., Wave Electronics and FoodNamoo go up and down completely randomly.
Pair Corralation between Wave Electronics and FoodNamoo
Assuming the 90 days trading horizon Wave Electronics Co is expected to generate 0.71 times more return on investment than FoodNamoo. However, Wave Electronics Co is 1.41 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 524,000 in Wave Electronics Co on September 25, 2024 and sell it today you would lose (137,000) from holding Wave Electronics Co or give up 26.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.06% |
| Values | Daily Returns |
Wave Electronics Co vs. FoodNamoo
Performance |
| Timeline |
| Wave Electronics |
| FoodNamoo |
Wave Electronics and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and FoodNamoo
The main advantage of trading using opposite Wave Electronics and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics 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.| Wave Electronics vs. Dongsin Engineering Construction | Wave Electronics vs. Doosan Fuel Cell | Wave Electronics vs. Daishin Balance 1 | Wave Electronics vs. Total Soft Bank |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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