Correlation Between FoodNamoo and Wave Electronics
Can any of the company-specific risk be diversified away by investing in both FoodNamoo and Wave Electronics 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 Wave Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and Wave Electronics Co, you can compare the effects of market volatilities on FoodNamoo and Wave Electronics 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 Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and Wave Electronics.
Diversification Opportunities for FoodNamoo and Wave Electronics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FoodNamoo and Wave is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics 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 Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of FoodNamoo i.e., FoodNamoo and Wave Electronics go up and down completely randomly.
Pair Corralation between FoodNamoo and Wave Electronics
Assuming the 90 days trading horizon FoodNamoo is expected to under-perform the Wave Electronics. In addition to that, FoodNamoo is 1.01 times more volatile than Wave Electronics Co. It trades about -0.15 of its total potential returns per unit of risk. Wave Electronics Co is currently generating about -0.04 per unit of volatility. If you would invest 398,500 in Wave Electronics Co on September 25, 2024 and sell it today you would lose (11,500) from holding Wave Electronics Co or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FoodNamoo vs. Wave Electronics Co
Performance |
| Timeline |
| FoodNamoo |
| Wave Electronics |
FoodNamoo and Wave Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FoodNamoo and Wave Electronics
The main advantage of trading using opposite FoodNamoo and Wave Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo position performs unexpectedly, Wave Electronics 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 Wave Electronics will offset losses from the drop in Wave Electronics' long position.| FoodNamoo vs. Woori Technology | FoodNamoo vs. Hwangkum Steel Technology | FoodNamoo vs. Daishin Information Communications | FoodNamoo vs. Kisan Telecom Co |
| Wave Electronics vs. Dongsin Engineering Construction | Wave Electronics vs. Doosan Fuel Cell | Wave Electronics vs. Daishin Balance 1 | Wave Electronics vs. Total Soft Bank |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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