Correlation Between Wonbang Tech and Miwon Chemicals
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Miwon Chemicals 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 Miwon Chemicals 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 Miwon Chemicals Co, you can compare the effects of market volatilities on Wonbang Tech and Miwon Chemicals 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 Miwon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Miwon Chemicals.
Diversification Opportunities for Wonbang Tech and Miwon Chemicals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wonbang and Miwon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Miwon Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemicals 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 Miwon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemicals has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Miwon Chemicals go up and down completely randomly.
Pair Corralation between Wonbang Tech and Miwon Chemicals
Assuming the 90 days trading horizon Wonbang Tech Co is expected to generate 2.17 times more return on investment than Miwon Chemicals. However, Wonbang Tech is 2.17 times more volatile than Miwon Chemicals Co. It trades about 0.43 of its potential returns per unit of risk. Miwon Chemicals Co is currently generating about 0.2 per unit of risk. If you would invest 1,114,000 in Wonbang Tech Co on October 8, 2024 and sell it today you would earn a total of 246,000 from holding Wonbang Tech Co or generate 22.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wonbang Tech Co vs. Miwon Chemicals Co
Performance |
Timeline |
Wonbang Tech |
Miwon Chemicals |
Wonbang Tech and Miwon Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wonbang Tech and Miwon Chemicals
The main advantage of trading using opposite Wonbang Tech and Miwon Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Miwon Chemicals 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 Miwon Chemicals will offset losses from the drop in Miwon Chemicals' long position.Wonbang Tech vs. Kyung Chang Industrial | Wonbang Tech vs. Drb Industrial | Wonbang Tech vs. Industrial Bank | Wonbang Tech vs. Ssangyong Information Communication |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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