Correlation Between Wonbang Tech and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Oriental Precision 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 Oriental Precision 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 Oriental Precision Engineering, you can compare the effects of market volatilities on Wonbang Tech and Oriental Precision 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 Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Oriental Precision.
Diversification Opportunities for Wonbang Tech and Oriental Precision
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wonbang and Oriental is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision 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 Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Oriental Precision go up and down completely randomly.
Pair Corralation between Wonbang Tech and Oriental Precision
Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the Oriental Precision. But the stock apears to be less risky and, when comparing its historical volatility, Wonbang Tech Co is 2.11 times less risky than Oriental Precision. The stock trades about -0.12 of its potential returns per unit of risk. The Oriental Precision Engineering is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 513,000 in Oriental Precision Engineering on December 10, 2024 and sell it today you would earn a total of 37,000 from holding Oriental Precision Engineering or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonbang Tech Co vs. Oriental Precision Engineering
Performance |
| Timeline |
| Wonbang Tech |
| Oriental Precision |
Wonbang Tech and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and Oriental Precision
The main advantage of trading using opposite Wonbang Tech and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Wonbang Tech vs. BGF Retail Co | Wonbang Tech vs. LG Household Healthcare | Wonbang Tech vs. Infinitt Healthcare Co | Wonbang Tech vs. GS Retail Co |
| Oriental Precision vs. Aekyung Industrial Co | Oriental Precision vs. MetaLabs Co | Oriental Precision vs. Kyeryong Construction Industrial | Oriental Precision vs. Samhwa Paint Industrial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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