Correlation Between Korea Ratings and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both Korea Ratings and Wonbang Tech 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 Korea Ratings and Wonbang Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Ratings Co and Wonbang Tech Co, you can compare the effects of market volatilities on Korea Ratings and Wonbang Tech 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 Korea Ratings with a short position of Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Ratings and Wonbang Tech.
Diversification Opportunities for Korea Ratings and Wonbang Tech
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Wonbang is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Ratings Co and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech and Korea Ratings 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 Korea Ratings Co are associated (or correlated) with Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of Korea Ratings i.e., Korea Ratings and Wonbang Tech go up and down completely randomly.
Pair Corralation between Korea Ratings and Wonbang Tech
Assuming the 90 days trading horizon Korea Ratings is expected to generate 2.24 times less return on investment than Wonbang Tech. But when comparing it to its historical volatility, Korea Ratings Co is 5.68 times less risky than Wonbang Tech. It trades about 0.11 of its potential returns per unit of risk. Wonbang Tech Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 895,480 in Wonbang Tech Co on August 28, 2024 and sell it today you would earn a total of 506,520 from holding Wonbang Tech Co or generate 56.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Ratings Co vs. Wonbang Tech Co
Performance |
| Timeline |
| Korea Ratings |
| Wonbang Tech |
Korea Ratings and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Ratings and Wonbang Tech
The main advantage of trading using opposite Korea Ratings and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Ratings position performs unexpectedly, Wonbang Tech 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.| Korea Ratings vs. Samsung Electronics Co | Korea Ratings vs. Samsung Electronics Co | Korea Ratings vs. LG Energy Solution | Korea Ratings vs. SK Hynix |
| Wonbang Tech vs. Samsung Electronics Co | Wonbang Tech vs. Samsung Electronics Co | Wonbang Tech vs. LG Energy Solution | Wonbang Tech vs. SK Hynix |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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