Correlation Between AfreecaTV and Winix
Can any of the company-specific risk be diversified away by investing in both AfreecaTV and Winix 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 AfreecaTV and Winix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and Winix Inc, you can compare the effects of market volatilities on AfreecaTV and Winix 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 AfreecaTV with a short position of Winix. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and Winix.
Diversification Opportunities for AfreecaTV and Winix
Very weak diversification
The 3 months correlation between AfreecaTV and Winix is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and Winix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winix Inc and AfreecaTV 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 AfreecaTV Co are associated (or correlated) with Winix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winix Inc has no effect on the direction of AfreecaTV i.e., AfreecaTV and Winix go up and down completely randomly.
Pair Corralation between AfreecaTV and Winix
Assuming the 90 days trading horizon AfreecaTV Co is expected to generate 1.41 times more return on investment than Winix. However, AfreecaTV is 1.41 times more volatile than Winix Inc. It trades about 0.13 of its potential returns per unit of risk. Winix Inc is currently generating about -0.43 per unit of risk. If you would invest 8,970,000 in AfreecaTV Co on August 25, 2024 and sell it today you would earn a total of 680,000 from holding AfreecaTV Co or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfreecaTV Co vs. Winix Inc
Performance |
| Timeline |
| AfreecaTV |
| Winix Inc |
AfreecaTV and Winix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfreecaTV and Winix
The main advantage of trading using opposite AfreecaTV and Winix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV position performs unexpectedly, Winix 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 Winix will offset losses from the drop in Winix's long position.The idea behind AfreecaTV Co and Winix 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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