Correlation Between ETC On and Weiss Korea

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

By analyzing existing cross correlation between ETC on CMCI and Weiss Korea Opportunity, you can compare the effects of market volatilities on ETC On and Weiss Korea 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 ETC On with a short position of Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC On and Weiss Korea.

Diversification Opportunities for ETC On and Weiss Korea

-0.81

Correlation Coefficient

ETC On  Weiss Korea

Pay attention - limited upside

The 3 months correlation between ETC and Weiss is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity and ETC On 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 ETC on CMCI are associated (or correlated) with Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of ETC On i.e., ETC On and Weiss Korea go up and down completely randomly.

Pair Corralation between ETC On and Weiss Korea

Assuming the 90 days trading horizon ETC On is expected to generate 5.73 times less return on investment than Weiss Korea. But when comparing it to its historical volatility, ETC on CMCI is 6.31 times less risky than Weiss Korea. It trades about 0.21 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  13,800  in Weiss Korea Opportunity on October 5, 2024 and sell it today you would earn a total of  1,949  from holding Weiss Korea Opportunity or generate 14.12% return on investment over 90 days.

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

ETC on CMCI  vs.  Weiss Korea Opportunity

ETC on CMCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ETC on CMCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ETC On and Weiss Korea

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

The idea behind ETC on CMCI and Weiss Korea Opportunity 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.