Correlation Between WISE ITech and FLITTO
Can any of the company-specific risk be diversified away by investing in both WISE ITech and FLITTO 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 WISE ITech and FLITTO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WISE iTech Co and FLITTO Inc, you can compare the effects of market volatilities on WISE ITech and FLITTO 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 WISE ITech with a short position of FLITTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WISE ITech and FLITTO.
Diversification Opportunities for WISE ITech and FLITTO
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WISE and FLITTO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WISE iTech Co and FLITTO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLITTO Inc and WISE ITech 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 WISE iTech Co are associated (or correlated) with FLITTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLITTO Inc has no effect on the direction of WISE ITech i.e., WISE ITech and FLITTO go up and down completely randomly.
Pair Corralation between WISE ITech and FLITTO
Assuming the 90 days trading horizon WISE iTech Co is expected to under-perform the FLITTO. But the stock apears to be less risky and, when comparing its historical volatility, WISE iTech Co is 1.54 times less risky than FLITTO. The stock trades about -0.04 of its potential returns per unit of risk. The FLITTO Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,780,000 in FLITTO Inc on August 28, 2024 and sell it today you would lose (1,433,000) from holding FLITTO Inc or give up 51.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WISE iTech Co vs. FLITTO Inc
Performance |
| Timeline |
| WISE iTech |
| FLITTO Inc |
WISE ITech and FLITTO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WISE ITech and FLITTO
The main advantage of trading using opposite WISE ITech and FLITTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WISE ITech position performs unexpectedly, FLITTO 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 FLITTO will offset losses from the drop in FLITTO's long position.The idea behind WISE iTech Co and FLITTO Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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