Correlation Between WONIK Materials and RaemongRaein

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

Diversification Opportunities for WONIK Materials and RaemongRaein

-0.3

Correlation Coefficient

WONIK Materials  RaemongRaein

Very good diversification

The 3 months correlation between WONIK and RaemongRaein is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and RaemongRaein Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaemongRaein 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 RaemongRaein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaemongRaein has no effect on the direction of WONIK Materials i.e., WONIK Materials and RaemongRaein go up and down completely randomly.

Pair Corralation between WONIK Materials and RaemongRaein

Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to generate 0.61 times more return on investment than RaemongRaein. However, WONIK Materials CoLtd is 1.63 times less risky than RaemongRaein. It trades about 0.15 of its potential returns per unit of risk. RaemongRaein Co is currently generating about -0.13 per unit of risk. If you would invest  1,716,000  in WONIK Materials CoLtd on December 25, 2024 and sell it today you would earn a total of  434,000  from holding WONIK Materials CoLtd or generate 25.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

WONIK Materials CoLtd  vs.  RaemongRaein Co

WONIK Materials CoLtd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WONIK Materials CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WONIK Materials sustained solid returns over the last few months and may actually be approaching a breakup point.

RaemongRaein

Risk-Adjusted Performance

Very Weak

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

Pair Trading with WONIK Materials and RaemongRaein

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

The idea behind WONIK Materials CoLtd and RaemongRaein 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.