Correlation Between Wonbang Tech and Raphas

Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Raphas 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 Raphas 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 Raphas Co, you can compare the effects of market volatilities on Wonbang Tech and Raphas 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 Raphas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Raphas.

Diversification Opportunities for Wonbang Tech and Raphas

0.27

Correlation Coefficient

Wonbang Tech  Raphas

Modest diversification

The 3 months correlation between Wonbang and Raphas is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Raphas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphas 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 Raphas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphas has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Raphas go up and down completely randomly.

Pair Corralation between Wonbang Tech and Raphas

Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the Raphas. But the stock apears to be less risky and, when comparing its historical volatility, Wonbang Tech Co is 1.49 times less risky than Raphas. The stock trades about -0.03 of its potential returns per unit of risk. The Raphas Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,487,000  in Raphas Co on December 30, 2024 and sell it today you would earn a total of  90,000  from holding Raphas Co or generate 6.05% 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.  Raphas Co

Wonbang Tech

Risk-Adjusted Performance

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.

Raphas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Raphas Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raphas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wonbang Tech and Raphas

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

The idea behind Wonbang Tech Co and Raphas 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.