Correlation Between Wave Electronics and Infinitt Healthcare
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and Infinitt Healthcare 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 Infinitt Healthcare 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 Infinitt Healthcare Co, you can compare the effects of market volatilities on Wave Electronics and Infinitt Healthcare 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 Infinitt Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Infinitt Healthcare.
Diversification Opportunities for Wave Electronics and Infinitt Healthcare
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wave and Infinitt is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Infinitt Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinitt Healthcare 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 Infinitt Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinitt Healthcare has no effect on the direction of Wave Electronics i.e., Wave Electronics and Infinitt Healthcare go up and down completely randomly.
Pair Corralation between Wave Electronics and Infinitt Healthcare
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Infinitt Healthcare. In addition to that, Wave Electronics is 1.4 times more volatile than Infinitt Healthcare Co. It trades about -0.12 of its total potential returns per unit of risk. Infinitt Healthcare Co is currently generating about 0.14 per unit of volatility. If you would invest 420,000 in Infinitt Healthcare Co on October 25, 2024 and sell it today you would earn a total of 9,500 from holding Infinitt Healthcare Co or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. Infinitt Healthcare Co
Performance |
| Timeline |
| Wave Electronics |
| Infinitt Healthcare |
Wave Electronics and Infinitt Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Infinitt Healthcare
The main advantage of trading using opposite Wave Electronics and Infinitt Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, Infinitt Healthcare 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 Infinitt Healthcare will offset losses from the drop in Infinitt Healthcare's long position.| Wave Electronics vs. Kolon Plastics | Wave Electronics vs. LG Household Healthcare | Wave Electronics vs. Hana Materials | Wave Electronics vs. LAKE MATERIALS LTD |
| Infinitt Healthcare vs. KB Financial Group | Infinitt Healthcare vs. Shinhan Financial Group | Infinitt Healthcare vs. Hana Financial | Infinitt Healthcare vs. Woori Financial Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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