Correlation Between Derkwoo Electronics and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Derkwoo 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 Derkwoo Electronics and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Derkwoo Electronics Co and FoodNamoo, you can compare the effects of market volatilities on Derkwoo 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 Derkwoo Electronics with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Derkwoo Electronics and FoodNamoo.
Diversification Opportunities for Derkwoo Electronics and FoodNamoo
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Derkwoo and FoodNamoo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Derkwoo Electronics Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Derkwoo 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 Derkwoo 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 Derkwoo Electronics i.e., Derkwoo Electronics and FoodNamoo go up and down completely randomly.
Pair Corralation between Derkwoo Electronics and FoodNamoo
Assuming the 90 days trading horizon Derkwoo Electronics Co is expected to generate 0.73 times more return on investment than FoodNamoo. However, Derkwoo Electronics Co is 1.37 times less risky than FoodNamoo. It trades about 0.15 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.4 per unit of risk. If you would invest 492,000 in Derkwoo Electronics Co on October 13, 2024 and sell it today you would earn a total of 23,000 from holding Derkwoo Electronics Co or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Derkwoo Electronics Co vs. FoodNamoo
Performance |
| Timeline |
| Derkwoo Electronics |
| FoodNamoo |
Derkwoo Electronics and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Derkwoo Electronics and FoodNamoo
The main advantage of trading using opposite Derkwoo Electronics and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Derkwoo 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.| Derkwoo Electronics vs. PJ Metal Co | Derkwoo Electronics vs. Mobile Appliance | Derkwoo Electronics vs. Nice Information Telecommunication | Derkwoo Electronics vs. Lotte Data Communication |
| FoodNamoo vs. Heungkuk Metaltech CoLtd | FoodNamoo vs. LG Household Healthcare | FoodNamoo vs. Air Busan Co | FoodNamoo vs. Youngsin Metal Industrial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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