Correlation Between EBEST Investment and Wave Electronics
Can any of the company-specific risk be diversified away by investing in both EBEST Investment and Wave Electronics 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 EBEST Investment and Wave Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBEST Investment Securities and Wave Electronics Co, you can compare the effects of market volatilities on EBEST Investment and Wave Electronics 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 EBEST Investment with a short position of Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Wave Electronics.
Diversification Opportunities for EBEST Investment and Wave Electronics
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EBEST and Wave is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of EBEST Investment i.e., EBEST Investment and Wave Electronics go up and down completely randomly.
Pair Corralation between EBEST Investment and Wave Electronics
Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the Wave Electronics. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.74 times less risky than Wave Electronics. The stock trades about -0.09 of its potential returns per unit of risk. The Wave Electronics Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 377,000 in Wave Electronics Co on September 14, 2024 and sell it today you would lose (7,500) from holding Wave Electronics Co or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBEST Investment Securities vs. Wave Electronics Co
Performance |
| Timeline |
| EBEST Investment Sec |
| Wave Electronics |
EBEST Investment and Wave Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBEST Investment and Wave Electronics
The main advantage of trading using opposite EBEST Investment and Wave Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, Wave Electronics 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 Wave Electronics will offset losses from the drop in Wave Electronics' long position.| EBEST Investment vs. KB Financial Group | EBEST Investment vs. Shinhan Financial Group | EBEST Investment vs. Hana Financial | EBEST Investment vs. Woori Financial Group |
| Wave Electronics vs. DB Financial Investment | Wave Electronics vs. EBEST Investment Securities | Wave Electronics vs. Aprogen Healthcare Games | Wave Electronics vs. Sangsangin Investment Securities |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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