Correlation Between WONIK Materials and Eagle Veterinary
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and Eagle Veterinary 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 Eagle Veterinary 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 Eagle Veterinary Technology, you can compare the effects of market volatilities on WONIK Materials and Eagle Veterinary 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 Eagle Veterinary. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and Eagle Veterinary.
Diversification Opportunities for WONIK Materials and Eagle Veterinary
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WONIK and Eagle is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Eagle Veterinary Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Veterinary Tec 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 Eagle Veterinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Veterinary Tec has no effect on the direction of WONIK Materials i.e., WONIK Materials and Eagle Veterinary go up and down completely randomly.
Pair Corralation between WONIK Materials and Eagle Veterinary
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to under-perform the Eagle Veterinary. But the stock apears to be less risky and, when comparing its historical volatility, WONIK Materials CoLtd is 1.14 times less risky than Eagle Veterinary. The stock trades about -0.05 of its potential returns per unit of risk. The Eagle Veterinary Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 501,314 in Eagle Veterinary Technology on September 12, 2024 and sell it today you would lose (58,814) from holding Eagle Veterinary Technology or give up 11.73% 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. Eagle Veterinary Technology
Performance |
| Timeline |
| WONIK Materials CoLtd |
| Eagle Veterinary Tec |
WONIK Materials and Eagle Veterinary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and Eagle Veterinary
The main advantage of trading using opposite WONIK Materials and Eagle Veterinary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, Eagle Veterinary 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 Eagle Veterinary will offset losses from the drop in Eagle Veterinary's long position.| WONIK Materials vs. LG Chemicals | WONIK Materials vs. POSCO Holdings | WONIK Materials vs. Hanwha Solutions | WONIK Materials vs. Lotte Chemical Corp |
| Eagle Veterinary vs. LS Materials | Eagle Veterinary vs. WONIK Materials CoLtd | Eagle Veterinary vs. Jeju Beer Co | Eagle Veterinary vs. National Plastic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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