Correlation Between IC Technology and FoodNamoo

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

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

Diversification Opportunities for IC Technology and FoodNamoo

-0.26

Correlation Coefficient

IC Technology  FoodNamoo

Very good diversification

The 3 months correlation between 052860 and FoodNamoo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding IC Technology Co and FoodNamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FoodNamoo and IC Technology 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 IC Technology Co 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 IC Technology i.e., IC Technology and FoodNamoo go up and down completely randomly.

Pair Corralation between IC Technology and FoodNamoo

Assuming the 90 days trading horizon IC Technology Co is expected to generate 2.21 times more return on investment than FoodNamoo. However, IC Technology is 2.21 times more volatile than FoodNamoo. It trades about 0.14 of its potential returns per unit of risk. FoodNamoo is currently generating about -0.09 per unit of risk. If you would invest  161,200  in IC Technology Co on November 29, 2024 and sell it today you would earn a total of  69,300  from holding IC Technology Co or generate 42.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IC Technology Co  vs.  FoodNamoo

IC Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IC Technology Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IC Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

FoodNamoo

Risk-Adjusted Performance

Very Weak

Over the last 90 days FoodNamoo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IC Technology and FoodNamoo

The main advantage of trading using opposite IC Technology and FoodNamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IC Technology 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.

The idea behind IC Technology Co and FoodNamoo 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.