Correlation Between FLITTO and WISE ITech

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

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

Diversification Opportunities for FLITTO and WISE ITech

0.8

Correlation Coefficient

FLITTO  WISE ITech

Very poor diversification

The 3 months correlation between FLITTO and WISE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FLITTO Inc and WISE iTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISE iTech and FLITTO 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 FLITTO Inc are associated (or correlated) with WISE ITech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISE iTech has no effect on the direction of FLITTO i.e., FLITTO and WISE ITech go up and down completely randomly.

Pair Corralation between FLITTO and WISE ITech

Assuming the 90 days trading horizon FLITTO Inc is expected to generate 1.82 times more return on investment than WISE ITech. However, FLITTO is 1.82 times more volatile than WISE iTech Co. It trades about 0.07 of its potential returns per unit of risk. WISE iTech Co is currently generating about 0.08 per unit of risk. If you would invest  1,720,000  in FLITTO Inc on September 4, 2024 and sell it today you would earn a total of  215,000  from holding FLITTO Inc or generate 12.5% return on investment over 90 days.

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

FLITTO Inc  vs.  WISE iTech Co

FLITTO Inc

Risk-Adjusted Performance

5 of 100

Modest

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

WISE iTech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WISE iTech Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, WISE ITech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FLITTO and WISE ITech

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

The idea behind FLITTO Inc and WISE iTech 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.