Correlation Between Wonil Special and Kwang Jin
Can any of the company-specific risk be diversified away by investing in both Wonil Special and Kwang Jin 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 Wonil Special and Kwang Jin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Kwang Jin Ind, you can compare the effects of market volatilities on Wonil Special and Kwang Jin 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 Wonil Special with a short position of Kwang Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Kwang Jin.
Diversification Opportunities for Wonil Special and Kwang Jin
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wonil and Kwang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Kwang Jin Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwang Jin Ind and Wonil Special 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 Wonil Special Steel are associated (or correlated) with Kwang Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwang Jin Ind has no effect on the direction of Wonil Special i.e., Wonil Special and Kwang Jin go up and down completely randomly.
Pair Corralation between Wonil Special and Kwang Jin
Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.77 times more return on investment than Kwang Jin. However, Wonil Special Steel is 1.3 times less risky than Kwang Jin. It trades about 0.0 of its potential returns per unit of risk. Kwang Jin Ind is currently generating about -0.12 per unit of risk. If you would invest 732,000 in Wonil Special Steel on September 26, 2024 and sell it today you would lose (7,000) from holding Wonil Special Steel or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Kwang Jin Ind
Performance |
| Timeline |
| Wonil Special Steel |
| Kwang Jin Ind |
Wonil Special and Kwang Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Kwang Jin
The main advantage of trading using opposite Wonil Special and Kwang Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special position performs unexpectedly, Kwang Jin 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 Kwang Jin will offset losses from the drop in Kwang Jin's long position.| Wonil Special vs. Ssangyong Information Communication | Wonil Special vs. SK Telecom Co | Wonil Special vs. Bookook Steel | Wonil Special vs. Daedong Steel Co |
| Kwang Jin vs. Wonil Special Steel | Kwang Jin vs. Bookook Steel | Kwang Jin vs. Kyeryong Construction Industrial | Kwang Jin vs. Hironic 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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