Correlation Between COWAY and Wintec
Can any of the company-specific risk be diversified away by investing in both COWAY and Wintec 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 Wintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COWAY Co and Wintec Co, you can compare the effects of market volatilities on COWAY and Wintec 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 Wintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of COWAY and Wintec.
Diversification Opportunities for COWAY and Wintec
Good diversification
The 3 months correlation between COWAY and Wintec is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding COWAY Co and Wintec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintec 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 Wintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintec has no effect on the direction of COWAY i.e., COWAY and Wintec go up and down completely randomly.
Pair Corralation between COWAY and Wintec
Assuming the 90 days trading horizon COWAY is expected to generate 4.57 times less return on investment than Wintec. But when comparing it to its historical volatility, COWAY Co is 2.98 times less risky than Wintec. It trades about 0.02 of its potential returns per unit of risk. Wintec Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 250,500 in Wintec Co on August 24, 2024 and sell it today you would earn a total of 38,000 from holding Wintec Co or generate 15.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COWAY Co vs. Wintec Co
Performance |
| Timeline |
| COWAY |
| Wintec |
COWAY and Wintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COWAY and Wintec
The main advantage of trading using opposite COWAY and Wintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COWAY position performs unexpectedly, Wintec 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 Wintec will offset losses from the drop in Wintec's long position.| COWAY vs. Ilji Technology Co | COWAY vs. HB Technology TD | COWAY vs. Visang Education | COWAY vs. Dong A Steel Technology |
| Wintec vs. Woorim Machinery Co | Wintec vs. SK Chemicals Co | Wintec vs. HJ ShipBuilding Construction | Wintec vs. Nam Hwa Construction |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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