Correlation Between Miwon Chemical and FOODWELL

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

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

Diversification Opportunities for Miwon Chemical and FOODWELL

0.27

Correlation Coefficient

Miwon Chemical  FOODWELL

Modest diversification

The 3 months correlation between Miwon and FOODWELL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and FOODWELL go up and down completely randomly.

Pair Corralation between Miwon Chemical and FOODWELL

Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.59 times more return on investment than FOODWELL. However, Miwon Chemical is 1.69 times less risky than FOODWELL. It trades about 0.06 of its potential returns per unit of risk. FOODWELL Co is currently generating about 0.0 per unit of risk. If you would invest  6,162,780  in Miwon Chemical on October 15, 2024 and sell it today you would earn a total of  1,717,220  from holding Miwon Chemical or generate 27.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Miwon Chemical  vs.  FOODWELL Co

Miwon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miwon Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Miwon Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FOODWELL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOODWELL Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FOODWELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Miwon Chemical and FOODWELL

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

The idea behind Miwon Chemical and FOODWELL Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.