Correlation Between FOODWELL and SillaJen

Can any of the company-specific risk be diversified away by investing in both FOODWELL and SillaJen 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 FOODWELL and SillaJen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FOODWELL Co and SillaJen, you can compare the effects of market volatilities on FOODWELL and SillaJen 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 FOODWELL with a short position of SillaJen. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and SillaJen.

Diversification Opportunities for FOODWELL and SillaJen

-0.26

Correlation Coefficient

FOODWELL  SillaJen

Very good diversification

The 3 months correlation between FOODWELL and SillaJen is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and SillaJen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SillaJen and FOODWELL 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 FOODWELL Co are associated (or correlated) with SillaJen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SillaJen has no effect on the direction of FOODWELL i.e., FOODWELL and SillaJen go up and down completely randomly.

Pair Corralation between FOODWELL and SillaJen

Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.55 times more return on investment than SillaJen. However, FOODWELL Co is 1.82 times less risky than SillaJen. It trades about 0.08 of its potential returns per unit of risk. SillaJen is currently generating about -0.03 per unit of risk. If you would invest  480,000  in FOODWELL Co on September 14, 2024 and sell it today you would earn a total of  39,000  from holding FOODWELL Co or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

FOODWELL Co  vs.  SillaJen

FOODWELL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FOODWELL Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FOODWELL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SillaJen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SillaJen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FOODWELL and SillaJen

The main advantage of trading using opposite FOODWELL and SillaJen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, SillaJen 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 SillaJen will offset losses from the drop in SillaJen's long position.

The idea behind FOODWELL Co and SillaJen pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.