Correlation Between FoodNamoo and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both FoodNamoo and Namyang Dairy 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 FoodNamoo and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and Namyang Dairy, you can compare the effects of market volatilities on FoodNamoo and Namyang Dairy 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 FoodNamoo with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and Namyang Dairy.
Diversification Opportunities for FoodNamoo and Namyang Dairy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between FoodNamoo and Namyang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy and FoodNamoo 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 FoodNamoo are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of FoodNamoo i.e., FoodNamoo and Namyang Dairy go up and down completely randomly.
Pair Corralation between FoodNamoo and Namyang Dairy
Assuming the 90 days trading horizon FoodNamoo is expected to under-perform the Namyang Dairy. In addition to that, FoodNamoo is 1.54 times more volatile than Namyang Dairy. It trades about -0.19 of its total potential returns per unit of risk. Namyang Dairy is currently generating about -0.09 per unit of volatility. If you would invest 6,320,000 in Namyang Dairy on October 12, 2024 and sell it today you would lose (220,000) from holding Namyang Dairy or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FoodNamoo vs. Namyang Dairy
Performance |
| Timeline |
| FoodNamoo |
| Namyang Dairy |
FoodNamoo and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FoodNamoo and Namyang Dairy
The main advantage of trading using opposite FoodNamoo and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| FoodNamoo vs. DB Financial Investment | FoodNamoo vs. Polaris Office Corp | FoodNamoo vs. DSC Investment | FoodNamoo vs. Sangsangin Investment Securities |
| Namyang Dairy vs. KakaoBank Corp | Namyang Dairy vs. Woori Financial Group | Namyang Dairy vs. Hankuk Steel Wire | Namyang Dairy vs. INSUN Environmental New |
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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