Correlation Between Maeil Dairies and Neo Cremar

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

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

Diversification Opportunities for Maeil Dairies and Neo Cremar

-0.02

Correlation Coefficient

Maeil Dairies  Neo Cremar

Good diversification

The 3 months correlation between Maeil and Neo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Maeil Dairies Co and Neo Cremar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Cremar and Maeil Dairies 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 Maeil Dairies Co are associated (or correlated) with Neo Cremar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Cremar has no effect on the direction of Maeil Dairies i.e., Maeil Dairies and Neo Cremar go up and down completely randomly.

Pair Corralation between Maeil Dairies and Neo Cremar

Assuming the 90 days trading horizon Maeil Dairies is expected to generate 7.98 times less return on investment than Neo Cremar. But when comparing it to its historical volatility, Maeil Dairies Co is 2.97 times less risky than Neo Cremar. It trades about 0.06 of its potential returns per unit of risk. Neo Cremar Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  548,000  in Neo Cremar Co on December 28, 2024 and sell it today you would earn a total of  173,000  from holding Neo Cremar Co or generate 31.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Maeil Dairies Co  vs.  Neo Cremar Co

Maeil Dairies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maeil Dairies Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Maeil Dairies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neo Cremar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Cremar Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neo Cremar sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maeil Dairies and Neo Cremar

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

The idea behind Maeil Dairies Co and Neo Cremar 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.