Correlation Between Wonbang Tech and KPX Green
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and KPX Green 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 KPX Green 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 KPX Green Chemical, you can compare the effects of market volatilities on Wonbang Tech and KPX Green 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 KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and KPX Green.
Diversification Opportunities for Wonbang Tech and KPX Green
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wonbang and KPX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and KPX Green go up and down completely randomly.
Pair Corralation between Wonbang Tech and KPX Green
Assuming the 90 days trading horizon Wonbang Tech is expected to generate 2.85 times less return on investment than KPX Green. But when comparing it to its historical volatility, Wonbang Tech Co is 2.45 times less risky than KPX Green. It trades about 0.32 of its potential returns per unit of risk. KPX Green Chemical is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 478,442 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 219,558 from holding KPX Green Chemical or generate 45.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonbang Tech Co vs. KPX Green Chemical
Performance |
| Timeline |
| Wonbang Tech |
| KPX Green Chemical |
Wonbang Tech and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and KPX Green
The main advantage of trading using opposite Wonbang Tech and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Wonbang Tech vs. LS Materials | Wonbang Tech vs. Korean Reinsurance Co | Wonbang Tech vs. Hyundai Engineering Plastics | Wonbang Tech vs. Ecoplastic |
| KPX Green vs. CKH Food Health | KPX Green vs. Keyang Electric Machinery | KPX Green vs. Nam Hwa Construction | KPX Green vs. Hanshin Construction 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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