Correlation Between Taokaenoi Food and Home Product

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

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

Diversification Opportunities for Taokaenoi Food and Home Product

0.35

Correlation Coefficient

Taokaenoi Food  Home Product

Weak diversification

The 3 months correlation between Taokaenoi and Home is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Taokaenoi Food Marketing and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center and Taokaenoi Food 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 Taokaenoi Food Marketing are associated (or correlated) with Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Taokaenoi Food i.e., Taokaenoi Food and Home Product go up and down completely randomly.

Pair Corralation between Taokaenoi Food and Home Product

Assuming the 90 days trading horizon Taokaenoi Food Marketing is expected to generate 59.86 times more return on investment than Home Product. However, Taokaenoi Food is 59.86 times more volatile than Home Product Center. It trades about 0.11 of its potential returns per unit of risk. Home Product Center is currently generating about 0.06 per unit of risk. If you would invest  905.00  in Taokaenoi Food Marketing on September 1, 2024 and sell it today you would lose (60.00) from holding Taokaenoi Food Marketing or give up 6.63% of portfolio value over 90 days.

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

Taokaenoi Food Marketing  vs.  Home Product Center

Taokaenoi Food Marketing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taokaenoi Food Marketing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Taokaenoi Food disclosed solid returns over the last few months and may actually be approaching a breakup point.

Home Product Center

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home Product Center are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Home Product may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Taokaenoi Food and Home Product

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

The idea behind Taokaenoi Food Marketing and Home Product Center 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 Commodity Directory module to find actively traded commodities issued by global exchanges.