Correlation Between Foodnamoo and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Foodnamoo and HANA Micron 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 HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodnamoo and HANA Micron, you can compare the effects of market volatilities on Foodnamoo and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodnamoo and HANA Micron.
Diversification Opportunities for Foodnamoo and HANA Micron
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foodnamoo and HANA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Foodnamoo i.e., Foodnamoo and HANA Micron go up and down completely randomly.
Pair Corralation between Foodnamoo and HANA Micron
Assuming the 90 days trading horizon Foodnamoo is expected to generate 1.14 times more return on investment than HANA Micron. However, Foodnamoo is 1.14 times more volatile than HANA Micron. It trades about -0.1 of its potential returns per unit of risk. HANA Micron is currently generating about -0.27 per unit of risk. If you would invest 328,000 in Foodnamoo on September 3, 2024 and sell it today you would lose (24,000) from holding Foodnamoo or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodnamoo vs. HANA Micron
Performance |
| Timeline |
| Foodnamoo |
| HANA Micron |
Foodnamoo and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodnamoo and HANA Micron
The main advantage of trading using opposite Foodnamoo and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodnamoo position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| Foodnamoo vs. Youngbo Chemical Co | Foodnamoo vs. Cots Technology Co | Foodnamoo vs. Sung Bo Chemicals | Foodnamoo vs. Koh Young Technology |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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