Correlation Between Wonik Ips and TES Co

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

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

Diversification Opportunities for Wonik Ips and TES Co

0.75

Correlation Coefficient

Wonik Ips  TES Co

Poor diversification

The 3 months correlation between Wonik and TES is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wonik Ips Co and TES Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TES Co and Wonik Ips 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 Wonik Ips Co are associated (or correlated) with TES Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TES Co has no effect on the direction of Wonik Ips i.e., Wonik Ips and TES Co go up and down completely randomly.

Pair Corralation between Wonik Ips and TES Co

Assuming the 90 days trading horizon Wonik Ips is expected to generate 3.18 times less return on investment than TES Co. But when comparing it to its historical volatility, Wonik Ips Co is 1.45 times less risky than TES Co. It trades about 0.09 of its potential returns per unit of risk. TES Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,344,613  in TES Co on December 1, 2024 and sell it today you would earn a total of  730,387  from holding TES Co or generate 54.32% return on investment over 90 days.

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

Wonik Ips Co  vs.  TES Co

Wonik Ips

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wonik Ips Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wonik Ips sustained solid returns over the last few months and may actually be approaching a breakup point.

TES Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TES Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TES Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wonik Ips and TES Co

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

The idea behind Wonik Ips Co and TES 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..