Correlation Between Wonbang Tech and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on Wonbang Tech and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Hanjoo Light.
Diversification Opportunities for Wonbang Tech and Hanjoo Light
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wonbang and Hanjoo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Hanjoo Light go up and down completely randomly.
Pair Corralation between Wonbang Tech and Hanjoo Light
Assuming the 90 days trading horizon Wonbang Tech Co is expected to generate 1.27 times more return on investment than Hanjoo Light. However, Wonbang Tech is 1.27 times more volatile than Hanjoo Light Metal. It trades about -0.05 of its potential returns per unit of risk. Hanjoo Light Metal is currently generating about -0.16 per unit of risk. If you would invest 1,648,000 in Wonbang Tech Co on October 24, 2024 and sell it today you would lose (213,000) from holding Wonbang Tech Co or give up 12.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonbang Tech Co vs. Hanjoo Light Metal
Performance |
| Timeline |
| Wonbang Tech |
| Hanjoo Light Metal |
Wonbang Tech and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonbang Tech and Hanjoo Light
The main advantage of trading using opposite Wonbang Tech and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| Wonbang Tech vs. LB Investment | Wonbang Tech vs. Dongbang Transport Logistics | Wonbang Tech vs. Korea Investment Holdings | Wonbang Tech vs. Nh Investment And |
| Hanjoo Light vs. Wonbang Tech Co | Hanjoo Light vs. A Tech Solution Co | Hanjoo Light vs. Orbitech Co | Hanjoo Light vs. V One Tech 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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