Correlation Between Miwon Chemicals and OCI

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

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

Diversification Opportunities for Miwon Chemicals and OCI

0.27

Correlation Coefficient

Miwon Chemicals  OCI

Modest diversification

The 3 months correlation between Miwon and OCI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemicals Co and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co and Miwon Chemicals 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 Chemicals Co are associated (or correlated) with OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of Miwon Chemicals i.e., Miwon Chemicals and OCI go up and down completely randomly.

Pair Corralation between Miwon Chemicals and OCI

Assuming the 90 days trading horizon Miwon Chemicals is expected to generate 33.81 times less return on investment than OCI. But when comparing it to its historical volatility, Miwon Chemicals Co is 4.02 times less risky than OCI. It trades about 0.02 of its potential returns per unit of risk. OCI Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,809,444  in OCI Co on December 4, 2024 and sell it today you would earn a total of  2,150,556  from holding OCI Co or generate 37.02% return on investment over 90 days.

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

Miwon Chemicals Co  vs.  OCI Co

Miwon Chemicals

Risk-Adjusted Performance

Weak

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

OCI Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OCI Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, OCI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Miwon Chemicals and OCI

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

The idea behind Miwon Chemicals Co and OCI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.