Correlation Between Wonbang Tech and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and ISU Chemical 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 Wonbang Tech and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonbang Tech Co and ISU Chemical Co, you can compare the effects of market volatilities on Wonbang Tech and ISU Chemical 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 Wonbang Tech with a short position of ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and ISU Chemical.
Diversification Opportunities for Wonbang Tech and ISU Chemical
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wonbang and ISU is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical and Wonbang Tech 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 Wonbang Tech Co are associated (or correlated) with ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and ISU Chemical go up and down completely randomly.
Pair Corralation between Wonbang Tech and ISU Chemical
Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the ISU Chemical. In addition to that, Wonbang Tech is 1.03 times more volatile than ISU Chemical Co. It trades about -0.18 of its total potential returns per unit of risk. ISU Chemical Co is currently generating about -0.18 per unit of volatility. If you would invest 856,000 in ISU Chemical Co on September 12, 2024 and sell it today you would lose (237,000) from holding ISU Chemical Co or give up 27.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.31% |
| Values | Daily Returns |
Wonbang Tech Co vs. ISU Chemical Co
Performance |
| Timeline |
| Wonbang Tech |
| ISU Chemical |
Wonbang Tech and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and ISU Chemical
The main advantage of trading using opposite Wonbang Tech and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Wonbang Tech vs. Daejoo Electronic Materials | Wonbang Tech vs. Wireless Power Amplifier | Wonbang Tech vs. LAKE MATERIALS LTD | Wonbang Tech vs. Handok Clean Tech |
| ISU Chemical vs. SungMoon Electronics Co | ISU Chemical vs. Anam Electronics Co | ISU Chemical vs. Daejoo Electronic Materials | ISU Chemical vs. Wave Electronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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