Correlation Between FoodNamoo and HLB Power

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

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

Diversification Opportunities for FoodNamoo and HLB Power

0.46

Correlation Coefficient

FoodNamoo  HLB Power

Very weak diversification

The 3 months correlation between FoodNamoo and HLB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power 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 HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of FoodNamoo i.e., FoodNamoo and HLB Power go up and down completely randomly.

Pair Corralation between FoodNamoo and HLB Power

Assuming the 90 days trading horizon FoodNamoo is expected to under-perform the HLB Power. But the stock apears to be less risky and, when comparing its historical volatility, FoodNamoo is 1.0 times less risky than HLB Power. The stock trades about -0.06 of its potential returns per unit of risk. The HLB Power Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  95,600  in HLB Power Co on October 27, 2024 and sell it today you would lose (56,100) from holding HLB Power Co or give up 58.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.22%
Values	Daily Returns

FoodNamoo  vs.  HLB Power Co

FoodNamoo

Risk-Adjusted Performance

0 of 100

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

HLB Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HLB Power Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with FoodNamoo and HLB Power

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

The idea behind FoodNamoo and HLB Power 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.