Correlation Between HMM and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both HMM and Wonbang Tech 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 HMM and Wonbang Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Wonbang Tech Co, you can compare the effects of market volatilities on HMM and Wonbang Tech 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 HMM with a short position of Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Wonbang Tech.
Diversification Opportunities for HMM and Wonbang Tech
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HMM and Wonbang is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech and HMM 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 HMM Co are associated (or correlated) with Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of HMM i.e., HMM and Wonbang Tech go up and down completely randomly.
Pair Corralation between HMM and Wonbang Tech
Assuming the 90 days trading horizon HMM Co is expected to generate 1.08 times more return on investment than Wonbang Tech. However, HMM is 1.08 times more volatile than Wonbang Tech Co. It trades about 0.0 of its potential returns per unit of risk. Wonbang Tech Co is currently generating about -0.34 per unit of risk. If you would invest 1,786,000 in HMM Co on September 4, 2024 and sell it today you would lose (21,000) from holding HMM Co or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMM Co vs. Wonbang Tech Co
Performance |
| Timeline |
| HMM Co |
| Wonbang Tech |
HMM and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and Wonbang Tech
The main advantage of trading using opposite HMM and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Wonbang Tech 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.The idea behind HMM Co and Wonbang Tech 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.| Wonbang Tech vs. MetaLabs Co | Wonbang Tech vs. Daiyang Metal Co | Wonbang Tech vs. Kbi Metal Co | Wonbang Tech vs. Seoul Semiconductor Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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