Correlation Between Wonbang Tech and Snet Systems

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

By analyzing existing cross correlation between Wonbang Tech Co and Snet systems, you can compare the effects of market volatilities on Wonbang Tech and Snet Systems 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 Wonbang Tech with a short position of Snet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Snet Systems.

Diversification Opportunities for Wonbang Tech and Snet Systems

-0.42

Correlation Coefficient

Wonbang Tech  Snet Systems

Very good diversification

The 3 months correlation between Wonbang and Snet is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Snet systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snet systems and Wonbang Tech 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 Wonbang Tech Co are associated (or correlated) with Snet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snet systems has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Snet Systems go up and down completely randomly.

Pair Corralation between Wonbang Tech and Snet Systems

Assuming the 90 days trading horizon Wonbang Tech Co is expected to generate 1.55 times more return on investment than Snet Systems. However, Wonbang Tech is 1.55 times more volatile than Snet systems. It trades about 0.04 of its potential returns per unit of risk. Snet systems is currently generating about -0.01 per unit of risk. If you would invest  928,613  in Wonbang Tech Co on October 22, 2024 and sell it today you would earn a total of  528,387  from holding Wonbang Tech Co or generate 56.9% return on investment over 90 days.

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

Wonbang Tech Co  vs.  Snet systems

Wonbang Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wonbang Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wonbang Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Snet systems

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Wonbang Tech and Snet Systems

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

The idea behind Wonbang Tech Co and Snet systems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.