Correlation Between Wave Electronics and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and Dongwoo Farm 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 Dongwoo Farm 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 Dongwoo Farm To, you can compare the effects of market volatilities on Wave Electronics and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Dongwoo Farm.
Diversification Opportunities for Wave Electronics and Dongwoo Farm
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wave and Dongwoo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Wave Electronics i.e., Wave Electronics and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Wave Electronics and Dongwoo Farm
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Dongwoo Farm. In addition to that, Wave Electronics is 2.3 times more volatile than Dongwoo Farm To. It trades about -0.07 of its total potential returns per unit of risk. Dongwoo Farm To is currently generating about 0.0 per unit of volatility. If you would invest 198,873 in Dongwoo Farm To on October 14, 2024 and sell it today you would lose (373.00) from holding Dongwoo Farm To or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. Dongwoo Farm To
Performance |
| Timeline |
| Wave Electronics |
| Dongwoo Farm To |
Wave Electronics and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Dongwoo Farm
The main advantage of trading using opposite Wave Electronics and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Wave Electronics vs. NH Investment Securities | Wave Electronics vs. Samyung Trading Co | Wave Electronics vs. Daol Investment Securities | Wave Electronics vs. Automobile Pc |
| Dongwoo Farm vs. Daewoo Electronic Components | Dongwoo Farm vs. DC Media Co | Dongwoo Farm vs. Samwha Electronics Co | Dongwoo Farm vs. Wave 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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