Correlation Between Tae Kyung and Innowireless

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

By analyzing existing cross correlation between Tae Kyung Chemical and Innowireless Co, you can compare the effects of market volatilities on Tae Kyung and Innowireless 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 Tae Kyung with a short position of Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and Innowireless.

Diversification Opportunities for Tae Kyung and Innowireless

0.37

Correlation Coefficient

Tae Kyung  Innowireless

Weak diversification

The 3 months correlation between Tae and Innowireless is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Tae Kyung i.e., Tae Kyung and Innowireless go up and down completely randomly.

Pair Corralation between Tae Kyung and Innowireless

Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 0.92 times more return on investment than Innowireless. However, Tae Kyung Chemical is 1.08 times less risky than Innowireless. It trades about -0.02 of its potential returns per unit of risk. Innowireless Co is currently generating about -0.05 per unit of risk. If you would invest  1,293,752  in Tae Kyung Chemical on October 24, 2024 and sell it today you would lose (180,752) from holding Tae Kyung Chemical or give up 13.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.76%
Values	Daily Returns

Tae Kyung Chemical  vs.  Innowireless Co

Tae Kyung Chemical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tae Kyung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Innowireless

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innowireless Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innowireless sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tae Kyung and Innowireless

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

The idea behind Tae Kyung Chemical and Innowireless 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.