Correlation Between Foodnamoo and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Foodnamoo and Daewoo Engineering 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 Daewoo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodnamoo and Daewoo Engineering Construction, you can compare the effects of market volatilities on Foodnamoo and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodnamoo and Daewoo Engineering.
Diversification Opportunities for Foodnamoo and Daewoo Engineering
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Foodnamoo and Daewoo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Foodnamoo i.e., Foodnamoo and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Foodnamoo and Daewoo Engineering
Assuming the 90 days trading horizon Foodnamoo is expected to generate 1.06 times less return on investment than Daewoo Engineering. But when comparing it to its historical volatility, Foodnamoo is 1.09 times less risky than Daewoo Engineering. It trades about 0.16 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 337,500 in Daewoo Engineering Construction on November 27, 2024 and sell it today you would earn a total of 21,500 from holding Daewoo Engineering Construction or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodnamoo vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| Foodnamoo |
| Daewoo Engineering |
Foodnamoo and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodnamoo and Daewoo Engineering
The main advantage of trading using opposite Foodnamoo and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodnamoo position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| Foodnamoo vs. Green Cross Medical | Foodnamoo vs. BooKook Steel Co | Foodnamoo vs. Korean Reinsurance Co | Foodnamoo vs. Jeju Bank |
| Daewoo Engineering vs. Bookook Steel | Daewoo Engineering vs. Hyundai BNG Steel | Daewoo Engineering vs. GAMEVIL | Daewoo Engineering vs. Netmarble Games Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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