Correlation Between Wonil Special and Poongsan

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

By analyzing existing cross correlation between Wonil Special Steel and Poongsan, you can compare the effects of market volatilities on Wonil Special and Poongsan 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 Wonil Special with a short position of Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Poongsan.

Diversification Opportunities for Wonil Special and Poongsan

0.31

Correlation Coefficient

Wonil Special  Poongsan

Weak diversification

The 3 months correlation between Wonil and Poongsan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan and Wonil Special 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 Wonil Special Steel are associated (or correlated) with Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Wonil Special i.e., Wonil Special and Poongsan go up and down completely randomly.

Pair Corralation between Wonil Special and Poongsan

Assuming the 90 days trading horizon Wonil Special is expected to generate 13.86 times less return on investment than Poongsan. But when comparing it to its historical volatility, Wonil Special Steel is 3.75 times less risky than Poongsan. It trades about 0.05 of its potential returns per unit of risk. Poongsan is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,981,182  in Poongsan on December 24, 2024 and sell it today you would earn a total of  1,528,818  from holding Poongsan or generate 30.69% return on investment over 90 days.

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

Wonil Special Steel  vs.  Poongsan

Wonil Special Steel

Risk-Adjusted Performance

Insignificant

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

Poongsan

Risk-Adjusted Performance

Good

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

Pair Trading with Wonil Special and Poongsan

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

The idea behind Wonil Special Steel and Poongsan 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.