Correlation Between Wonil Special and Formetal
Can any of the company-specific risk be diversified away by investing in both Wonil Special and Formetal 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 Formetal 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 Formetal Co, you can compare the effects of market volatilities on Wonil Special and Formetal 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 Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Formetal.
Diversification Opportunities for Wonil Special and Formetal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wonil and Formetal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Wonil Special i.e., Wonil Special and Formetal go up and down completely randomly.
Pair Corralation between Wonil Special and Formetal
Assuming the 90 days trading horizon Wonil Special is expected to generate 5.59 times less return on investment than Formetal. But when comparing it to its historical volatility, Wonil Special Steel is 4.15 times less risky than Formetal. It trades about 0.17 of its potential returns per unit of risk. Formetal Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 338,000 in Formetal Co on November 2, 2024 and sell it today you would earn a total of 42,500 from holding Formetal Co or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Formetal Co
Performance |
| Timeline |
| Wonil Special Steel |
| Formetal |
Wonil Special and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Formetal
The main advantage of trading using opposite Wonil Special and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Wonil Special vs. LG Chemicals | Wonil Special vs. POSCO Holdings | Wonil Special vs. Hanwha Solutions | Wonil Special vs. Lotte Chemical Corp |
| Formetal vs. Daechang Steel Co | Formetal vs. PlayD Co | Formetal vs. Dongbu Insurance Co | Formetal vs. Lotte Non Life Insurance |
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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