Correlation Between FoodNamoo and Cloud Air
Can any of the company-specific risk be diversified away by investing in both FoodNamoo and Cloud Air 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 Cloud Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and Cloud Air CoLtd, you can compare the effects of market volatilities on FoodNamoo and Cloud Air 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 Cloud Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and Cloud Air.
Diversification Opportunities for FoodNamoo and Cloud Air
Poor diversification
The 3 months correlation between FoodNamoo and Cloud is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Cloud Air CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Air CoLtd 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 Cloud Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Air CoLtd has no effect on the direction of FoodNamoo i.e., FoodNamoo and Cloud Air go up and down completely randomly.
Pair Corralation between FoodNamoo and Cloud Air
Assuming the 90 days trading horizon FoodNamoo is expected to generate 1.58 times more return on investment than Cloud Air. However, FoodNamoo is 1.58 times more volatile than Cloud Air CoLtd. It trades about -0.03 of its potential returns per unit of risk. Cloud Air CoLtd is currently generating about -0.05 per unit of risk. If you would invest 352,500 in FoodNamoo on September 13, 2024 and sell it today you would lose (20,500) from holding FoodNamoo or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FoodNamoo vs. Cloud Air CoLtd
Performance |
| Timeline |
| FoodNamoo |
| Cloud Air CoLtd |
FoodNamoo and Cloud Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FoodNamoo and Cloud Air
The main advantage of trading using opposite FoodNamoo and Cloud Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo position performs unexpectedly, Cloud Air 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 Cloud Air will offset losses from the drop in Cloud Air's long position.| FoodNamoo vs. Maeil Dairies Co | FoodNamoo vs. HYUNDAI FEED | FoodNamoo vs. Neo Cremar Co | FoodNamoo vs. Dongwoo Farm To |
| Cloud Air vs. SK Hynix | Cloud Air vs. People Technology | Cloud Air vs. Hana Materials | Cloud Air vs. SIMMTECH 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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