Correlation Between Daewoo SBI and Worldex Industry

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

By analyzing existing cross correlation between Daewoo SBI SPAC and Worldex Industry Trading, you can compare the effects of market volatilities on Daewoo SBI and Worldex Industry 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 Daewoo SBI with a short position of Worldex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Worldex Industry.

Diversification Opportunities for Daewoo SBI and Worldex Industry

0.15

Correlation Coefficient

Daewoo SBI  Worldex Industry

Average diversification

The 3 months correlation between Daewoo and Worldex is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Worldex Industry Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldex Industry Trading and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Worldex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldex Industry Trading has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Worldex Industry go up and down completely randomly.

Pair Corralation between Daewoo SBI and Worldex Industry

Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 0.91 times more return on investment than Worldex Industry. However, Daewoo SBI SPAC is 1.09 times less risky than Worldex Industry. It trades about -0.02 of its potential returns per unit of risk. Worldex Industry Trading is currently generating about -0.04 per unit of risk. If you would invest  358,000  in Daewoo SBI SPAC on October 21, 2024 and sell it today you would lose (66,000) from holding Daewoo SBI SPAC or give up 18.44% of portfolio value over 90 days.

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

Daewoo SBI SPAC  vs.  Worldex Industry Trading

Daewoo SBI SPAC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daewoo SBI SPAC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewoo SBI sustained solid returns over the last few months and may actually be approaching a breakup point.

Worldex Industry Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldex Industry Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Daewoo SBI and Worldex Industry

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

The idea behind Daewoo SBI SPAC and Worldex Industry Trading 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.