Correlation Between Foodnamoo and Carriesoft

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

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

Diversification Opportunities for Foodnamoo and Carriesoft

-0.36

Correlation Coefficient

Foodnamoo  Carriesoft

Very good diversification

The 3 months correlation between Foodnamoo and Carriesoft is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Foodnamoo and Carriesoft Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriesoft 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 Carriesoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriesoft has no effect on the direction of Foodnamoo i.e., Foodnamoo and Carriesoft go up and down completely randomly.

Pair Corralation between Foodnamoo and Carriesoft

Assuming the 90 days trading horizon Foodnamoo is expected to under-perform the Carriesoft. In addition to that, Foodnamoo is 1.26 times more volatile than Carriesoft Co. It trades about -0.01 of its total potential returns per unit of risk. Carriesoft Co is currently generating about 0.02 per unit of volatility. If you would invest  340,500  in Carriesoft Co on September 12, 2024 and sell it today you would earn a total of  4,500  from holding Carriesoft Co or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Foodnamoo  vs.  Carriesoft 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 somewhat strong basic indicators, Foodnamoo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carriesoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carriesoft Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carriesoft 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 Carriesoft

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

The idea behind Foodnamoo and Carriesoft 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.