Correlation Between ENERGYMACHINERY KOREA and Moadata

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

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

Diversification Opportunities for ENERGYMACHINERY KOREA and Moadata

-0.06

Correlation Coefficient

ENERGYMACHINERY KOREA  Moadata

Good diversification

The 3 months correlation between ENERGYMACHINERY and Moadata is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Moadata Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moadata and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd are associated (or correlated) with Moadata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moadata has no effect on the direction of ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Moadata go up and down completely randomly.

Pair Corralation between ENERGYMACHINERY KOREA and Moadata

Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 0.61 times more return on investment than Moadata. However, ENERGYMACHINERY KOREA CoLtd is 1.63 times less risky than Moadata. It trades about 0.0 of its potential returns per unit of risk. Moadata Co is currently generating about -0.12 per unit of risk. If you would invest  219,000  in ENERGYMACHINERY KOREA CoLtd on December 5, 2024 and sell it today you would lose (1,000.00) from holding ENERGYMACHINERY KOREA CoLtd or give up 0.46% of portfolio value over 90 days.

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

ENERGYMACHINERY KOREA CoLtd  vs.  Moadata Co

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

Good

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

Moadata

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moadata Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ENERGYMACHINERY KOREA and Moadata

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

The idea behind ENERGYMACHINERY KOREA CoLtd and Moadata 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.