Correlation Between TES and Wonik Ips

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

Diversification Opportunities for TES and Wonik Ips

0.8

Correlation Coefficient

TES  Wonik Ips

Very poor diversification

The 3 months correlation between TES and Wonik is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TES Co and Wonik Ips Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonik Ips 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 Ips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonik Ips has no effect on the direction of TES i.e., TES and Wonik Ips go up and down completely randomly.

Pair Corralation between TES and Wonik Ips

Assuming the 90 days trading horizon TES Co is expected to generate 1.43 times more return on investment than Wonik Ips. However, TES is 1.43 times more volatile than Wonik Ips Co. It trades about 0.16 of its potential returns per unit of risk. Wonik Ips Co is currently generating about 0.07 per unit of risk. If you would invest  1,550,000  in TES Co on December 30, 2024 and sell it today you would earn a total of  620,000  from holding TES Co or generate 40.0% return on investment over 90 days.

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

TES Co  vs.  Wonik Ips Co

TES Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TES Co are ranked lower than 12 (%) 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 Ips

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wonik Ips Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wonik Ips sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TES and Wonik Ips

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

The idea behind TES Co and Wonik Ips 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.