Correlation Between Applied Materials and Weiss Korea
Can any of the company-specific risk be diversified away by investing in both Applied Materials and Weiss Korea 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 Applied Materials and Weiss Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Weiss Korea Opportunity, you can compare the effects of market volatilities on Applied Materials and Weiss Korea 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 Applied Materials with a short position of Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Weiss Korea.
Diversification Opportunities for Applied Materials and Weiss Korea
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Weiss is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity and Applied Materials 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 Applied Materials are associated (or correlated) with Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of Applied Materials i.e., Applied Materials and Weiss Korea go up and down completely randomly.
Pair Corralation between Applied Materials and Weiss Korea
Assuming the 90 days trading horizon Applied Materials is expected to generate 1.77 times more return on investment than Weiss Korea. However, Applied Materials is 1.77 times more volatile than Weiss Korea Opportunity. It trades about 0.06 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about 0.0 per unit of risk. If you would invest 9,549 in Applied Materials on September 19, 2024 and sell it today you would earn a total of 7,672 from holding Applied Materials or generate 80.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Applied Materials vs. Weiss Korea Opportunity
Performance |
| Timeline |
| Applied Materials |
| Weiss Korea Opportunity |
Applied Materials and Weiss Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Weiss Korea
The main advantage of trading using opposite Applied Materials and Weiss Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, Weiss Korea 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 Weiss Korea will offset losses from the drop in Weiss Korea's long position.| Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Hyundai Motor | Applied Materials vs. Reliance Industries Ltd |
| Weiss Korea vs. Compagnie Plastic Omnium | Weiss Korea vs. Amedeo Air Four | Weiss Korea vs. CleanTech Lithium plc | Weiss Korea vs. Applied Materials |
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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