Correlation Between Finetechnix CoLtd and Wooyang

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

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

Diversification Opportunities for Finetechnix CoLtd and Wooyang

-0.21

Correlation Coefficient

Finetechnix CoLtd  Wooyang

Very good diversification

The 3 months correlation between Finetechnix and Wooyang is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Finetechnix CoLtd and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang and Finetechnix CoLtd 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 Finetechnix CoLtd are associated (or correlated) with Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of Finetechnix CoLtd i.e., Finetechnix CoLtd and Wooyang go up and down completely randomly.

Pair Corralation between Finetechnix CoLtd and Wooyang

Assuming the 90 days trading horizon Finetechnix CoLtd is expected to generate 1.88 times more return on investment than Wooyang. However, Finetechnix CoLtd is 1.88 times more volatile than Wooyang Co. It trades about 0.14 of its potential returns per unit of risk. Wooyang Co is currently generating about 0.03 per unit of risk. If you would invest  87,000  in Finetechnix CoLtd on December 1, 2024 and sell it today you would earn a total of  58,200  from holding Finetechnix CoLtd or generate 66.9% return on investment over 90 days.

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

Finetechnix CoLtd  vs.  Wooyang Co

Finetechnix CoLtd

Risk-Adjusted Performance

Good

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

Wooyang

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wooyang Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wooyang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Finetechnix CoLtd and Wooyang

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

The idea behind Finetechnix CoLtd and Wooyang 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 Transaction History module to view history of all your transactions and understand their impact on performance.