Correlation Between Wave Electronics and InfoBank
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and InfoBank 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 Wave Electronics and InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Electronics Co and InfoBank, you can compare the effects of market volatilities on Wave Electronics and InfoBank 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 Wave Electronics with a short position of InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and InfoBank.
Diversification Opportunities for Wave Electronics and InfoBank
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wave and InfoBank is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Wave Electronics 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 Wave Electronics Co are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Wave Electronics i.e., Wave Electronics and InfoBank go up and down completely randomly.
Pair Corralation between Wave Electronics and InfoBank
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the InfoBank. But the stock apears to be less risky and, when comparing its historical volatility, Wave Electronics Co is 1.05 times less risky than InfoBank. The stock trades about -0.06 of its potential returns per unit of risk. The InfoBank is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 888,000 in InfoBank on September 13, 2024 and sell it today you would lose (211,000) from holding InfoBank or give up 23.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. InfoBank
Performance |
| Timeline |
| Wave Electronics |
| InfoBank |
Wave Electronics and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and InfoBank
The main advantage of trading using opposite Wave Electronics and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Wave Electronics vs. Derkwoo Electronics Co | Wave Electronics vs. Shinil Electronics Co | Wave Electronics vs. Iljin Materials Co | Wave Electronics vs. Ecoplastic |
| InfoBank vs. DC Media Co | InfoBank vs. Barunson Entertainment Arts | InfoBank vs. SKONEC Entertainment Co | InfoBank vs. Hanjoo Light Metal |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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