Correlation Between Foodnamoo and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Foodnamoo and Hanjoo Light 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 Hanjoo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodnamoo and Hanjoo Light Metal, you can compare the effects of market volatilities on Foodnamoo and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodnamoo and Hanjoo Light.
Diversification Opportunities for Foodnamoo and Hanjoo Light
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foodnamoo and Hanjoo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Foodnamoo i.e., Foodnamoo and Hanjoo Light go up and down completely randomly.
Pair Corralation between Foodnamoo and Hanjoo Light
Assuming the 90 days trading horizon Foodnamoo is expected to under-perform the Hanjoo Light. In addition to that, Foodnamoo is 1.08 times more volatile than Hanjoo Light Metal. It trades about -0.33 of its total potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.03 per unit of volatility. If you would invest 78,600 in Hanjoo Light Metal on October 16, 2024 and sell it today you would lose (1,200) from holding Hanjoo Light Metal or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodnamoo vs. Hanjoo Light Metal
Performance |
| Timeline |
| Foodnamoo |
| Hanjoo Light Metal |
Foodnamoo and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodnamoo and Hanjoo Light
The main advantage of trading using opposite Foodnamoo and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodnamoo position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Foodnamoo vs. Seers Technology | Foodnamoo vs. Korean Air Lines | Foodnamoo vs. Hwangkum Steel Technology | Foodnamoo vs. Sungdo Engineering Construction |
| Hanjoo Light vs. Samyung Trading Co | Hanjoo Light vs. Lotte Rental Co | Hanjoo Light vs. Hyundai Green Food | Hanjoo Light vs. KTB Investment Securities |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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