Correlation Between Weiss Korea and Indutrade
Can any of the company-specific risk be diversified away by investing in both Weiss Korea and Indutrade 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 Weiss Korea and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weiss Korea Opportunity and Indutrade AB, you can compare the effects of market volatilities on Weiss Korea and Indutrade 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 Weiss Korea with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiss Korea and Indutrade.
Diversification Opportunities for Weiss Korea and Indutrade
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weiss and Indutrade is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Weiss Korea 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 Weiss Korea Opportunity are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Weiss Korea i.e., Weiss Korea and Indutrade go up and down completely randomly.
Pair Corralation between Weiss Korea and Indutrade
Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to under-perform the Indutrade. But the stock apears to be less risky and, when comparing its historical volatility, Weiss Korea Opportunity is 1.06 times less risky than Indutrade. The stock trades about 0.0 of its potential returns per unit of risk. The Indutrade AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 24,123 in Indutrade AB on October 22, 2024 and sell it today you would earn a total of 5,597 from holding Indutrade AB or generate 23.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.75% |
Values | Daily Returns |
Weiss Korea Opportunity vs. Indutrade AB
Performance |
Timeline |
Weiss Korea Opportunity |
Indutrade AB |
Weiss Korea and Indutrade Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weiss Korea and Indutrade
The main advantage of trading using opposite Weiss Korea and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weiss Korea position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.Weiss Korea vs. Gear4music Plc | Weiss Korea vs. Alien Metals | Weiss Korea vs. Zegona Communications Plc | Weiss Korea vs. Orient Telecoms |
Indutrade vs. Austevoll Seafood ASA | Indutrade vs. Naked Wines plc | Indutrade vs. Eastman Chemical Co | Indutrade vs. Scandic Hotels Group |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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