Correlation Between Microfriend and FOODWELL
Can any of the company-specific risk be diversified away by investing in both Microfriend and FOODWELL 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 Microfriend and FOODWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and FOODWELL Co, you can compare the effects of market volatilities on Microfriend and FOODWELL 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 Microfriend with a short position of FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and FOODWELL.
Diversification Opportunities for Microfriend and FOODWELL
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microfriend and FOODWELL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and Microfriend 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 Microfriend are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Microfriend i.e., Microfriend and FOODWELL go up and down completely randomly.
Pair Corralation between Microfriend and FOODWELL
Assuming the 90 days trading horizon Microfriend is expected to under-perform the FOODWELL. In addition to that, Microfriend is 1.82 times more volatile than FOODWELL Co. It trades about -0.44 of its total potential returns per unit of risk. FOODWELL Co is currently generating about -0.14 per unit of volatility. If you would invest 531,000 in FOODWELL Co on September 1, 2024 and sell it today you would lose (32,000) from holding FOODWELL Co or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. FOODWELL Co
Performance |
| Timeline |
| Microfriend |
| FOODWELL |
Microfriend and FOODWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and FOODWELL
The main advantage of trading using opposite Microfriend and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.| Microfriend vs. SK Hynix | Microfriend vs. LX Semicon Co | Microfriend vs. Tokai Carbon Korea | Microfriend vs. People Technology |
| FOODWELL vs. Korea Real Estate | FOODWELL vs. Korea Ratings Co | FOODWELL vs. IQuest Co | FOODWELL vs. Wonbang Tech 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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