Correlation Between WONIK Materials and Pan Entertainment

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

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

Diversification Opportunities for WONIK Materials and Pan Entertainment

0.15

Correlation Coefficient

WONIK Materials  Pan Entertainment

Average diversification

The 3 months correlation between WONIK and Pan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Pan Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Entertainment and WONIK Materials 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 WONIK Materials CoLtd are associated (or correlated) with Pan Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Entertainment has no effect on the direction of WONIK Materials i.e., WONIK Materials and Pan Entertainment go up and down completely randomly.

Pair Corralation between WONIK Materials and Pan Entertainment

Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to generate 0.93 times more return on investment than Pan Entertainment. However, WONIK Materials CoLtd is 1.07 times less risky than Pan Entertainment. It trades about -0.03 of its potential returns per unit of risk. Pan Entertainment Co is currently generating about -0.06 per unit of risk. If you would invest  2,914,819  in WONIK Materials CoLtd on October 25, 2024 and sell it today you would lose (1,007,819) from holding WONIK Materials CoLtd or give up 34.58% of portfolio value over 90 days.

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

WONIK Materials CoLtd  vs.  Pan Entertainment Co

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 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.

Pan Entertainment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Entertainment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pan Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WONIK Materials and Pan Entertainment

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

The idea behind WONIK Materials CoLtd and Pan Entertainment 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.