Correlation Between FoodNamoo and Ottogi

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

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

Diversification Opportunities for FoodNamoo and Ottogi

0.76

Correlation Coefficient

FoodNamoo  Ottogi

Poor diversification

The 3 months correlation between FoodNamoo and Ottogi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and Ottogi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ottogi and FoodNamoo 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 FoodNamoo are associated (or correlated) with Ottogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ottogi has no effect on the direction of FoodNamoo i.e., FoodNamoo and Ottogi go up and down completely randomly.

Pair Corralation between FoodNamoo and Ottogi

Assuming the 90 days trading horizon FoodNamoo is expected to under-perform the Ottogi. In addition to that, FoodNamoo is 2.51 times more volatile than Ottogi. It trades about -0.08 of its total potential returns per unit of risk. Ottogi is currently generating about -0.07 per unit of volatility. If you would invest  40,350,000  in Ottogi on December 2, 2024 and sell it today you would lose (1,650,000) from holding Ottogi or give up 4.09% of portfolio value over 90 days.

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

FoodNamoo  vs.  Ottogi

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ottogi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with FoodNamoo and Ottogi

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

The idea behind FoodNamoo and Ottogi 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.