Correlation Between Wooyang and Asia Seed
Can any of the company-specific risk be diversified away by investing in both Wooyang and Asia Seed 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 Wooyang and Asia Seed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wooyang Co and Asia Seed CoLtd, you can compare the effects of market volatilities on Wooyang and Asia Seed 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 Wooyang with a short position of Asia Seed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wooyang and Asia Seed.
Diversification Opportunities for Wooyang and Asia Seed
Very poor diversification
The 3 months correlation between Wooyang and Asia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wooyang Co and Asia Seed CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Seed CoLtd and Wooyang 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 Wooyang Co are associated (or correlated) with Asia Seed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Seed CoLtd has no effect on the direction of Wooyang i.e., Wooyang and Asia Seed go up and down completely randomly.
Pair Corralation between Wooyang and Asia Seed
Assuming the 90 days trading horizon Wooyang Co is expected to under-perform the Asia Seed. In addition to that, Wooyang is 1.42 times more volatile than Asia Seed CoLtd. It trades about -0.17 of its total potential returns per unit of risk. Asia Seed CoLtd is currently generating about -0.24 per unit of volatility. If you would invest 268,000 in Asia Seed CoLtd on September 5, 2024 and sell it today you would lose (67,500) from holding Asia Seed CoLtd or give up 25.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wooyang Co vs. Asia Seed CoLtd
Performance |
Timeline |
Wooyang |
Asia Seed CoLtd |
Wooyang and Asia Seed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wooyang and Asia Seed
The main advantage of trading using opposite Wooyang and Asia Seed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wooyang position performs unexpectedly, Asia Seed 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 Asia Seed will offset losses from the drop in Asia Seed's long position.Wooyang vs. Maeil Dairies Co | Wooyang vs. HYUNDAI FEED | Wooyang vs. Neo Cremar Co | Wooyang vs. Dongwoo Farm To |
Asia Seed vs. Maeil Dairies Co | Asia Seed vs. HYUNDAI FEED | Asia Seed vs. Neo Cremar Co | Asia Seed vs. Dongwoo Farm To |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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