Correlation Between Raontech and FoodNamoo
Can any of the company-specific risk be diversified away by investing in both Raontech 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 Raontech and FoodNamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raontech and FoodNamoo, you can compare the effects of market volatilities on Raontech 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 Raontech with a short position of FoodNamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raontech and FoodNamoo.
Diversification Opportunities for Raontech and FoodNamoo
Modest diversification
The 3 months correlation between Raontech and FoodNamoo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and Raontech 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 Raontech 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 Raontech i.e., Raontech and FoodNamoo go up and down completely randomly.
Pair Corralation between Raontech and FoodNamoo
Assuming the 90 days trading horizon Raontech is expected to generate 1.18 times more return on investment than FoodNamoo. However, Raontech is 1.18 times more volatile than FoodNamoo. It trades about 0.0 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.05 per unit of risk. If you would invest 542,000 in Raontech on October 11, 2024 and sell it today you would lose (165,500) from holding Raontech or give up 30.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.64% |
| Values | Daily Returns |
Raontech vs. FoodNamoo
Performance |
| Timeline |
| Raontech |
| FoodNamoo |
Raontech and FoodNamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raontech and FoodNamoo
The main advantage of trading using opposite Raontech and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raontech 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.| Raontech vs. Samlip General Foods | Raontech vs. Daol Investment Securities | Raontech vs. Atinum Investment Co | Raontech vs. JYP Entertainment Corp |
| FoodNamoo vs. Anam Electronics Co | FoodNamoo vs. Daewoo Electronic Components | FoodNamoo vs. Jeong Moon Information | FoodNamoo vs. Samji Electronics Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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