Correlation Between WONIK Materials and Mobile Appliance
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance, you can compare the effects of market volatilities on WONIK Materials and Mobile Appliance 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 Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and Mobile Appliance.
Diversification Opportunities for WONIK Materials and Mobile Appliance
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WONIK and Mobile is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of WONIK Materials i.e., WONIK Materials and Mobile Appliance go up and down completely randomly.
Pair Corralation between WONIK Materials and Mobile Appliance
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to under-perform the Mobile Appliance. But the stock apears to be less risky and, when comparing its historical volatility, WONIK Materials CoLtd is 1.25 times less risky than Mobile Appliance. The stock trades about -0.04 of its potential returns per unit of risk. The Mobile Appliance is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 277,000 in Mobile Appliance on December 12, 2024 and sell it today you would lose (83,300) from holding Mobile Appliance or give up 30.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WONIK Materials CoLtd vs. Mobile Appliance
Performance |
| Timeline |
| WONIK Materials CoLtd |
| Mobile Appliance |
WONIK Materials and Mobile Appliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and Mobile Appliance
The main advantage of trading using opposite WONIK Materials and Mobile Appliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, Mobile Appliance 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 Mobile Appliance will offset losses from the drop in Mobile Appliance's long position.| WONIK Materials vs. Soulbrain Holdings Co | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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