Correlation Between Wave Electronics and Raontech
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and Raontech 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 Raontech 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 Raontech, you can compare the effects of market volatilities on Wave Electronics and Raontech 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 Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Raontech.
Diversification Opportunities for Wave Electronics and Raontech
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wave and Raontech is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Wave Electronics i.e., Wave Electronics and Raontech go up and down completely randomly.
Pair Corralation between Wave Electronics and Raontech
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Raontech. But the stock apears to be less risky and, when comparing its historical volatility, Wave Electronics Co is 2.09 times less risky than Raontech. The stock trades about -0.04 of its potential returns per unit of risk. The Raontech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 293,500 in Raontech on October 30, 2024 and sell it today you would earn a total of 26,500 from holding Raontech or generate 9.03% 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. Raontech
Performance |
| Timeline |
| Wave Electronics |
| Raontech |
Wave Electronics and Raontech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Raontech
The main advantage of trading using opposite Wave Electronics and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech'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 |
| Raontech vs. Atinum Investment Co | Raontech vs. Dongkuk Structures Construction | Raontech vs. Worldex Industry Trading | Raontech vs. Seohee Construction 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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