Correlation Between WONIK Materials and Automobile
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on WONIK Materials and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and Automobile.
Diversification Opportunities for WONIK Materials and Automobile
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WONIK and Automobile is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of WONIK Materials i.e., WONIK Materials and Automobile go up and down completely randomly.
Pair Corralation between WONIK Materials and Automobile
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to under-perform the Automobile. But the stock apears to be less risky and, when comparing its historical volatility, WONIK Materials CoLtd is 1.52 times less risky than Automobile. The stock trades about -0.18 of its potential returns per unit of risk. The Automobile Pc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 68,000 in Automobile Pc on September 27, 2024 and sell it today you would lose (8,200) from holding Automobile Pc or give up 12.06% 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. Automobile Pc
Performance |
| Timeline |
| WONIK Materials CoLtd |
| Automobile Pc |
WONIK Materials and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and Automobile
The main advantage of trading using opposite WONIK Materials and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| WONIK Materials vs. LG Chemicals | WONIK Materials vs. POSCO Holdings | WONIK Materials vs. Hanwha Solutions | WONIK Materials vs. Lotte Chemical Corp |
| Automobile vs. Woori Technology Investment | Automobile vs. Samsung Card Co | Automobile vs. Korea Real Estate | Automobile vs. CHOROKBAEM PANY 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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