Correlation Between COFCO Joycome and Mowi ASA

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

By analyzing existing cross correlation between COFCO Joycome Foods and Mowi ASA, you can compare the effects of market volatilities on COFCO Joycome and Mowi ASA 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 COFCO Joycome with a short position of Mowi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and Mowi ASA.

Diversification Opportunities for COFCO Joycome and Mowi ASA

-0.02

Correlation Coefficient

COFCO Joycome  Mowi ASA

Good diversification

The 3 months correlation between COFCO and Mowi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and COFCO Joycome 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 COFCO Joycome Foods are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of COFCO Joycome i.e., COFCO Joycome and Mowi ASA go up and down completely randomly.

Pair Corralation between COFCO Joycome and Mowi ASA

Assuming the 90 days horizon COFCO Joycome Foods is expected to generate 2.29 times more return on investment than Mowi ASA. However, COFCO Joycome is 2.29 times more volatile than Mowi ASA. It trades about 0.11 of its potential returns per unit of risk. Mowi ASA is currently generating about -0.19 per unit of risk. If you would invest  16.00  in COFCO Joycome Foods on September 23, 2024 and sell it today you would earn a total of  1.00  from holding COFCO Joycome Foods or generate 6.25% return on investment over 90 days.

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

COFCO Joycome Foods  vs.  Mowi ASA

COFCO Joycome Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COFCO Joycome Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COFCO Joycome reported solid returns over the last few months and may actually be approaching a breakup point.

Mowi ASA

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with COFCO Joycome and Mowi ASA

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

The idea behind COFCO Joycome Foods and Mowi ASA 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..