Correlation Between Miwon Chemical and DataSolution

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

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

Diversification Opportunities for Miwon Chemical and DataSolution

-0.26

Correlation Coefficient

Miwon Chemical  DataSolution

Very good diversification

The 3 months correlation between Miwon and DataSolution is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and DataSolution go up and down completely randomly.

Pair Corralation between Miwon Chemical and DataSolution

Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.22 times more return on investment than DataSolution. However, Miwon Chemical is 4.48 times less risky than DataSolution. It trades about 0.1 of its potential returns per unit of risk. DataSolution is currently generating about 0.01 per unit of risk. If you would invest  6,365,190  in Miwon Chemical on September 15, 2024 and sell it today you would earn a total of  1,624,810  from holding Miwon Chemical or generate 25.53% return on investment over 90 days.

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

Miwon Chemical  vs.  DataSolution

Miwon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miwon Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Miwon Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DataSolution

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DataSolution are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DataSolution sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Miwon Chemical and DataSolution

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

The idea behind Miwon Chemical and DataSolution 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.