Correlation Between Wooyang and Neo Cremar

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

By analyzing existing cross correlation between Wooyang Co and Neo Cremar Co, you can compare the effects of market volatilities on Wooyang and Neo Cremar 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 Neo Cremar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wooyang and Neo Cremar.

Diversification Opportunities for Wooyang and Neo Cremar

0.09

Correlation Coefficient

Wooyang  Neo Cremar

Significant diversification

The 3 months correlation between Wooyang and Neo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wooyang Co and Neo Cremar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Cremar 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 Neo Cremar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Cremar has no effect on the direction of Wooyang i.e., Wooyang and Neo Cremar go up and down completely randomly.

Pair Corralation between Wooyang and Neo Cremar

Assuming the 90 days trading horizon Wooyang Co is expected to under-perform the Neo Cremar. But the stock apears to be less risky and, when comparing its historical volatility, Wooyang Co is 1.0 times less risky than Neo Cremar. The stock trades about -0.15 of its potential returns per unit of risk. The Neo Cremar Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  652,000  in Neo Cremar Co on September 15, 2024 and sell it today you would lose (85,000) from holding Neo Cremar Co or give up 13.04% of portfolio value over 90 days.

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

Wooyang Co  vs.  Neo Cremar Co

Wooyang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wooyang Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Neo Cremar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neo Cremar 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 Wooyang and Neo Cremar

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

The idea behind Wooyang Co and Neo Cremar 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.