Correlation Between Choil Aluminum and Wider Planet
Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Wider Planet 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 Choil Aluminum and Wider Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choil Aluminum and Wider Planet, you can compare the effects of market volatilities on Choil Aluminum and Wider Planet 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 Choil Aluminum with a short position of Wider Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Wider Planet.
Diversification Opportunities for Choil Aluminum and Wider Planet
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Choil and Wider is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Wider Planet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wider Planet and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Wider Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wider Planet has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Wider Planet go up and down completely randomly.
Pair Corralation between Choil Aluminum and Wider Planet
Assuming the 90 days trading horizon Choil Aluminum is expected to under-perform the Wider Planet. But the stock apears to be less risky and, when comparing its historical volatility, Choil Aluminum is 2.8 times less risky than Wider Planet. The stock trades about -0.06 of its potential returns per unit of risk. The Wider Planet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,618,000 in Wider Planet on September 13, 2024 and sell it today you would lose (28,000) from holding Wider Planet or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Choil Aluminum vs. Wider Planet
Performance |
| Timeline |
| Choil Aluminum |
| Wider Planet |
Choil Aluminum and Wider Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choil Aluminum and Wider Planet
The main advantage of trading using opposite Choil Aluminum and Wider Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Wider Planet 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 Wider Planet will offset losses from the drop in Wider Planet's long position.| Choil Aluminum vs. Solution Advanced Technology | Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Sam Chun Dang |
| Wider Planet vs. Cheryong Industrial CoLtd | Wider Planet vs. Kbi Metal Co | Wider Planet vs. Daedong Steel Co | Wider Planet vs. Fine Besteel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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