Correlation Between FoodNamoo and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both FoodNamoo and Solution Advanced 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 Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and Solution Advanced Technology, you can compare the effects of market volatilities on FoodNamoo and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and Solution Advanced.
Diversification Opportunities for FoodNamoo and Solution Advanced
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FoodNamoo and Solution is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of FoodNamoo i.e., FoodNamoo and Solution Advanced go up and down completely randomly.
Pair Corralation between FoodNamoo and Solution Advanced
Assuming the 90 days trading horizon FoodNamoo is expected to generate 44.25 times less return on investment than Solution Advanced. But when comparing it to its historical volatility, FoodNamoo is 4.69 times less risky than Solution Advanced. It trades about 0.03 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 143,000 in Solution Advanced Technology on November 21, 2024 and sell it today you would earn a total of 101,500 from holding Solution Advanced Technology or generate 70.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
FoodNamoo vs. Solution Advanced Technology
Performance |
Timeline |
FoodNamoo |
Solution Advanced |
FoodNamoo and Solution Advanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FoodNamoo and Solution Advanced
The main advantage of trading using opposite FoodNamoo and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.FoodNamoo vs. Dongwoo Farm To | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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