Correlation Between COWAY and Carriesoft
Can any of the company-specific risk be diversified away by investing in both COWAY and Carriesoft 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 COWAY and Carriesoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COWAY Co and Carriesoft Co, you can compare the effects of market volatilities on COWAY and Carriesoft 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 COWAY with a short position of Carriesoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of COWAY and Carriesoft.
Diversification Opportunities for COWAY and Carriesoft
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COWAY and Carriesoft is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding COWAY Co and Carriesoft Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriesoft and COWAY 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 COWAY Co are associated (or correlated) with Carriesoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriesoft has no effect on the direction of COWAY i.e., COWAY and Carriesoft go up and down completely randomly.
Pair Corralation between COWAY and Carriesoft
Assuming the 90 days trading horizon COWAY Co is expected to generate 0.53 times more return on investment than Carriesoft. However, COWAY Co is 1.9 times less risky than Carriesoft. It trades about 0.07 of its potential returns per unit of risk. Carriesoft Co is currently generating about 0.01 per unit of risk. If you would invest 5,650,000 in COWAY Co on August 30, 2024 and sell it today you would earn a total of 1,150,000 from holding COWAY Co or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COWAY Co vs. Carriesoft Co
Performance |
| Timeline |
| COWAY |
| Carriesoft |
COWAY and Carriesoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COWAY and Carriesoft
The main advantage of trading using opposite COWAY and Carriesoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COWAY position performs unexpectedly, Carriesoft 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 Carriesoft will offset losses from the drop in Carriesoft's long position.| COWAY vs. EV Advanced Material | COWAY vs. Daejoo Electronic Materials | COWAY vs. Union Materials Corp | COWAY vs. Lotte Energy Materials |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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