Correlation Between Insung Information and Techwing
Can any of the company-specific risk be diversified away by investing in both Insung Information and Techwing 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 Insung Information and Techwing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Techwing, you can compare the effects of market volatilities on Insung Information and Techwing 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 Insung Information with a short position of Techwing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Techwing.
Diversification Opportunities for Insung Information and Techwing
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insung and Techwing is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Techwing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techwing and Insung Information 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 Insung Information Co are associated (or correlated) with Techwing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techwing has no effect on the direction of Insung Information i.e., Insung Information and Techwing go up and down completely randomly.
Pair Corralation between Insung Information and Techwing
Assuming the 90 days trading horizon Insung Information Co is expected to under-perform the Techwing. But the stock apears to be less risky and, when comparing its historical volatility, Insung Information Co is 1.78 times less risky than Techwing. The stock trades about -0.16 of its potential returns per unit of risk. The Techwing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,515,000 in Techwing on November 6, 2024 and sell it today you would earn a total of 30,000 from holding Techwing or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Techwing
Performance |
| Timeline |
| Insung Information |
| Techwing |
Insung Information and Techwing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Techwing
The main advantage of trading using opposite Insung Information and Techwing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Techwing 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 Techwing will offset losses from the drop in Techwing's long position.| Insung Information vs. Heungkuk Metaltech CoLtd | Insung Information vs. KCC Engineering Construction | Insung Information vs. Hanshin Construction Co | Insung Information vs. Daiyang Metal Co |
| Techwing vs. Lotte Chilsung Beverage | Techwing vs. Daechang Steel Co | Techwing vs. Daehan Steel | Techwing vs. ABOV Semiconductor 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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