Correlation Between Foodnamoo and Poongsan
Can any of the company-specific risk be diversified away by investing in both Foodnamoo and Poongsan 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 Poongsan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodnamoo and Poongsan, you can compare the effects of market volatilities on Foodnamoo and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodnamoo and Poongsan.
Diversification Opportunities for Foodnamoo and Poongsan
Poor diversification
The 3 months correlation between Foodnamoo and Poongsan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Foodnamoo i.e., Foodnamoo and Poongsan go up and down completely randomly.
Pair Corralation between Foodnamoo and Poongsan
Assuming the 90 days trading horizon Foodnamoo is expected to under-perform the Poongsan. But the stock apears to be less risky and, when comparing its historical volatility, Foodnamoo is 1.07 times less risky than Poongsan. The stock trades about -0.33 of its potential returns per unit of risk. The Poongsan is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,130,000 in Poongsan on October 14, 2024 and sell it today you would earn a total of 220,000 from holding Poongsan or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodnamoo vs. Poongsan
Performance |
| Timeline |
| Foodnamoo |
| Poongsan |
Foodnamoo and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodnamoo and Poongsan
The main advantage of trading using opposite Foodnamoo and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodnamoo position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| Foodnamoo vs. Stic Investments | Foodnamoo vs. INFINITT Healthcare Co | Foodnamoo vs. NH Investment Securities | Foodnamoo vs. KTB Investment Securities |
| Poongsan vs. Cuckoo Homesys Co | Poongsan vs. Foodnamoo | Poongsan vs. FOODWELL Co | Poongsan vs. Sam Yang Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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