Correlation Between Foodnamoo and Korea Investment

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

By analyzing existing cross correlation between Foodnamoo and Korea Investment Holdings, you can compare the effects of market volatilities on Foodnamoo and Korea Investment 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 Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodnamoo and Korea Investment.

Diversification Opportunities for Foodnamoo and Korea Investment

-0.61

Correlation Coefficient

Foodnamoo  Korea Investment

Excellent diversification

The 3 months correlation between Foodnamoo and Korea is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings 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 Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Foodnamoo i.e., Foodnamoo and Korea Investment go up and down completely randomly.

Pair Corralation between Foodnamoo and Korea Investment

Assuming the 90 days trading horizon Foodnamoo is expected to under-perform the Korea Investment. In addition to that, Foodnamoo is 3.0 times more volatile than Korea Investment Holdings. It trades about -0.03 of its total potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.18 per unit of volatility. If you would invest  4,949,927  in Korea Investment Holdings on December 25, 2024 and sell it today you would earn a total of  670,073  from holding Korea Investment Holdings or generate 13.54% return on investment over 90 days.

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

Foodnamoo  vs.  Korea Investment Holdings

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Korea Investment Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Investment Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foodnamoo and Korea Investment

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

The idea behind Foodnamoo and Korea Investment Holdings 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.