Correlation Between TES and WONIK Materials

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

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

Diversification Opportunities for TES and WONIK Materials

0.48

Correlation Coefficient

TES  WONIK Materials

Very weak diversification

The 3 months correlation between TES and WONIK is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding TES Co and WONIK Materials CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WONIK Materials CoLtd and TES 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 TES Co are associated (or correlated) with WONIK Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WONIK Materials CoLtd has no effect on the direction of TES i.e., TES and WONIK Materials go up and down completely randomly.

Pair Corralation between TES and WONIK Materials

Assuming the 90 days trading horizon TES Co is expected to generate 1.15 times more return on investment than WONIK Materials. However, TES is 1.15 times more volatile than WONIK Materials CoLtd. It trades about 0.09 of its potential returns per unit of risk. WONIK Materials CoLtd is currently generating about -0.1 per unit of risk. If you would invest  1,602,563  in TES Co on October 20, 2024 and sell it today you would earn a total of  238,437  from holding TES Co or generate 14.88% return on investment over 90 days.

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

TES Co  vs.  WONIK Materials CoLtd

TES Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TES Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TES sustained solid returns over the last few months and may actually be approaching a breakup point.

WONIK Materials CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WONIK Materials CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TES and WONIK Materials

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

The idea behind TES Co and WONIK Materials CoLtd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..