Correlation Between Wonbang Tech and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Hyundai Rotem 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 Hyundai Rotem 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 Hyundai Rotem Co, you can compare the effects of market volatilities on Wonbang Tech and Hyundai Rotem 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 Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Hyundai Rotem.
Diversification Opportunities for Wonbang Tech and Hyundai Rotem
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wonbang and Hyundai is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem 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 Hyundai Rotem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Rotem has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Wonbang Tech and Hyundai Rotem
Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the Hyundai Rotem. But the stock apears to be less risky and, when comparing its historical volatility, Wonbang Tech Co is 1.57 times less risky than Hyundai Rotem. The stock trades about -0.34 of its potential returns per unit of risk. The Hyundai Rotem Co is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 6,150,000 in Hyundai Rotem Co on September 4, 2024 and sell it today you would lose (1,130,000) from holding Hyundai Rotem Co or give up 18.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wonbang Tech Co vs. Hyundai Rotem Co
Performance |
| Timeline |
| Wonbang Tech |
| Hyundai Rotem |
Wonbang Tech and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and Hyundai Rotem
The main advantage of trading using opposite Wonbang Tech and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Hyundai Rotem 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 Hyundai Rotem will offset losses from the drop in Hyundai Rotem's long position.| Wonbang Tech vs. Grand Korea Leisure | Wonbang Tech vs. Han Kook Steel | Wonbang Tech vs. Dongbu Steel Co | Wonbang Tech vs. Iljin Display |
| Hyundai Rotem vs. Hyosung Chemical Corp | Hyundai Rotem vs. Kyung In Synthetic Corp | Hyundai Rotem vs. JC Chemical Co | Hyundai Rotem vs. Sung Bo Chemicals |
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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