Correlation Between Weiss Korea and River

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Can any of the company-specific risk be diversified away by investing in both Weiss Korea and River 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 River 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 River and Mercantile, you can compare the effects of market volatilities on Weiss Korea and River 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 River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiss Korea and River.

Diversification Opportunities for Weiss Korea and River

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Weiss and River is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Weiss Korea i.e., Weiss Korea and River go up and down completely randomly.

Pair Corralation between Weiss Korea and River

Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to generate 31.19 times more return on investment than River. However, Weiss Korea is 31.19 times more volatile than River and Mercantile. It trades about 0.2 of its potential returns per unit of risk. River and Mercantile is currently generating about -0.23 per unit of risk. If you would invest  13,700  in Weiss Korea Opportunity on October 6, 2024 and sell it today you would earn a total of  2,049  from holding Weiss Korea Opportunity or generate 14.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Weiss Korea Opportunity  vs.  River and Mercantile

 Performance 
       Timeline  
Weiss Korea Opportunity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 comparatively stable basic indicators, Weiss Korea is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
River and Mercantile 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Weiss Korea and River Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Weiss Korea and River

The main advantage of trading using opposite Weiss Korea and River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weiss Korea position performs unexpectedly, River 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 River will offset losses from the drop in River's long position.
The idea behind Weiss Korea Opportunity and River and Mercantile 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.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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