Correlation Between WONIK Materials and National Plastic
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and National Plastic 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 WONIK Materials and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WONIK Materials CoLtd and National Plastic Co, you can compare the effects of market volatilities on WONIK Materials and National Plastic 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 WONIK Materials with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and National Plastic.
Diversification Opportunities for WONIK Materials and National Plastic
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WONIK and National is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and WONIK 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 WONIK Materials CoLtd are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of WONIK Materials i.e., WONIK Materials and National Plastic go up and down completely randomly.
Pair Corralation between WONIK Materials and National Plastic
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to generate 1.86 times more return on investment than National Plastic. However, WONIK Materials is 1.86 times more volatile than National Plastic Co. It trades about -0.16 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.41 per unit of risk. If you would invest 1,893,000 in WONIK Materials CoLtd on November 9, 2024 and sell it today you would lose (93,000) from holding WONIK Materials CoLtd or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WONIK Materials CoLtd vs. National Plastic Co
Performance |
| Timeline |
| WONIK Materials CoLtd |
| National Plastic |
WONIK Materials and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and National Plastic
The main advantage of trading using opposite WONIK Materials and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| WONIK Materials vs. Soulbrain Holdings Co | WONIK Materials vs. Wonik Ips Co | WONIK Materials vs. TES Co | WONIK Materials vs. Dongjin Semichem Co |
| National Plastic vs. UJU Electronics Co | National Plastic vs. Digital Power Communications | National Plastic vs. PJ Electronics Co | National Plastic vs. Shinil 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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