Correlation Between Wider Planet and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Wider Planet and FoodNamoo 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 Wider Planet and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wider Planet and FoodNamoo, you can compare the effects of market volatilities on Wider Planet and FoodNamoo 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 Wider Planet with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wider Planet and FoodNamoo.
Diversification Opportunities for Wider Planet and FoodNamoo
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wider and FoodNamoo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wider Planet and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Wider Planet 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 Wider Planet are associated (or correlated) with FoodNamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FoodNamoo has no effect on the direction of Wider Planet i.e., Wider Planet and FoodNamoo go up and down completely randomly.
Pair Corralation between Wider Planet and FoodNamoo
Assuming the 90 days trading horizon Wider Planet is expected to generate 1.59 times more return on investment than FoodNamoo. However, Wider Planet is 1.59 times more volatile than FoodNamoo. It trades about 0.08 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.06 per unit of risk. If you would invest 491,500 in Wider Planet on September 12, 2024 and sell it today you would earn a total of 840,500 from holding Wider Planet or generate 171.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.49% |
| Values | Daily Returns |
Wider Planet vs. FoodNamoo
Performance |
| Timeline |
| Wider Planet |
| FoodNamoo |
Wider Planet and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wider Planet and FoodNamoo
The main advantage of trading using opposite Wider Planet and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wider Planet position performs unexpectedly, FoodNamoo 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 FoodNamoo will offset losses from the drop in FoodNamoo's long position.| Wider Planet vs. FoodNamoo | Wider Planet vs. Choil Aluminum | Wider Planet vs. Korea Alcohol Industrial | Wider Planet vs. Duksan Hi Metal |
| FoodNamoo vs. Maeil Dairies Co | FoodNamoo vs. HYUNDAI FEED | FoodNamoo vs. Neo Cremar Co | FoodNamoo vs. Dongwoo Farm To |
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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