Correlation Between WONIK Materials and Taewoong Logistics

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

Diversification Opportunities for WONIK Materials and Taewoong Logistics

0.55

Correlation Coefficient

WONIK Materials  Taewoong Logistics

Very weak diversification

The 3 months correlation between WONIK and Taewoong is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of WONIK Materials i.e., WONIK Materials and Taewoong Logistics go up and down completely randomly.

Pair Corralation between WONIK Materials and Taewoong Logistics

Assuming the 90 days trading horizon WONIK Materials is expected to generate 1.45 times less return on investment than Taewoong Logistics. In addition to that, WONIK Materials is 1.15 times more volatile than Taewoong Logistics CoLtd. It trades about 0.25 of its total potential returns per unit of risk. Taewoong Logistics CoLtd is currently generating about 0.43 per unit of volatility. If you would invest  255,741  in Taewoong Logistics CoLtd on October 9, 2024 and sell it today you would earn a total of  45,759  from holding Taewoong Logistics CoLtd or generate 17.89% return on investment over 90 days.

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

WONIK Materials CoLtd  vs.  Taewoong Logistics CoLtd

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.

Taewoong Logistics CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taewoong Logistics CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Taewoong Logistics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WONIK Materials and Taewoong Logistics

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

The idea behind WONIK Materials CoLtd and Taewoong Logistics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.