Correlation Between ALTEOGEN and WOOJUNG BIO

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

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

Diversification Opportunities for ALTEOGEN and WOOJUNG BIO

0.61

Correlation Coefficient

ALTEOGEN  WOOJUNG BIO

Poor diversification

The 3 months correlation between ALTEOGEN and WOOJUNG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ALTEOGEN and WOOJUNG BIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOJUNG BIO and ALTEOGEN 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 ALTEOGEN are associated (or correlated) with WOOJUNG BIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOJUNG BIO has no effect on the direction of ALTEOGEN i.e., ALTEOGEN and WOOJUNG BIO go up and down completely randomly.

Pair Corralation between ALTEOGEN and WOOJUNG BIO

Assuming the 90 days trading horizon ALTEOGEN is expected to generate 1.9 times less return on investment than WOOJUNG BIO. In addition to that, ALTEOGEN is 1.33 times more volatile than WOOJUNG BIO. It trades about 0.05 of its total potential returns per unit of risk. WOOJUNG BIO is currently generating about 0.12 per unit of volatility. If you would invest  161,700  in WOOJUNG BIO on October 6, 2024 and sell it today you would earn a total of  11,800  from holding WOOJUNG BIO or generate 7.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

ALTEOGEN  vs.  WOOJUNG BIO

ALTEOGEN

Risk-Adjusted Performance

0 of 100

Very Weak

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

WOOJUNG BIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOOJUNG BIO 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.

Pair Trading with ALTEOGEN and WOOJUNG BIO

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

The idea behind ALTEOGEN and WOOJUNG BIO 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.