Correlation Between Foodnamoo and Newtree CoLtd

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

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

Diversification Opportunities for Foodnamoo and Newtree CoLtd

0.75

Correlation Coefficient

Foodnamoo  Newtree CoLtd

Poor diversification

The 3 months correlation between Foodnamoo and Newtree is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Newtree CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtree CoLtd 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 Newtree CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtree CoLtd has no effect on the direction of Foodnamoo i.e., Foodnamoo and Newtree CoLtd go up and down completely randomly.

Pair Corralation between Foodnamoo and Newtree CoLtd

Assuming the 90 days trading horizon Foodnamoo is expected to generate 0.81 times more return on investment than Newtree CoLtd. However, Foodnamoo is 1.23 times less risky than Newtree CoLtd. It trades about -0.07 of its potential returns per unit of risk. Newtree CoLtd is currently generating about -0.2 per unit of risk. If you would invest  329,500  in Foodnamoo on October 10, 2024 and sell it today you would lose (50,000) from holding Foodnamoo or give up 15.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Foodnamoo  vs.  Newtree CoLtd

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.

Newtree CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newtree CoLtd 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 Newtree CoLtd

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

The idea behind Foodnamoo and Newtree CoLtd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.