Correlation Between Wave Electronics and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and Korea Computer 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 Korea Computer 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 Korea Computer, you can compare the effects of market volatilities on Wave Electronics and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Korea Computer.
Diversification Opportunities for Wave Electronics and Korea Computer
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wave and Korea is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of Wave Electronics i.e., Wave Electronics and Korea Computer go up and down completely randomly.
Pair Corralation between Wave Electronics and Korea Computer
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Wave Electronics Co is 1.23 times less risky than Korea Computer. The stock trades about -0.04 of its potential returns per unit of risk. The Korea Computer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 470,282 in Korea Computer on October 30, 2024 and sell it today you would earn a total of 45,718 from holding Korea Computer or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. Korea Computer
Performance |
| Timeline |
| Wave Electronics |
| Korea Computer |
Wave Electronics and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Korea Computer
The main advantage of trading using opposite Wave Electronics and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Wave Electronics vs. Samsung Electronics Co | Wave Electronics vs. Samsung Electronics Co | Wave Electronics vs. SK Hynix | Wave Electronics vs. HMM Co |
| Korea Computer vs. Anam Electronics Co | Korea Computer vs. ABCO Electronics Co | Korea Computer vs. Jinro Distillers Co | Korea Computer vs. PJ Electronics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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