Correlation Between WONIK Materials and CU Tech
Can any of the company-specific risk be diversified away by investing in both WONIK Materials and CU Tech 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 CU Tech 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 CU Tech Corp, you can compare the effects of market volatilities on WONIK Materials and CU Tech 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 CU Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and CU Tech.
Diversification Opportunities for WONIK Materials and CU Tech
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WONIK and 376290 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and CU Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CU Tech Corp 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 CU Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CU Tech Corp has no effect on the direction of WONIK Materials i.e., WONIK Materials and CU Tech go up and down completely randomly.
Pair Corralation between WONIK Materials and CU Tech
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to under-perform the CU Tech. In addition to that, WONIK Materials is 2.3 times more volatile than CU Tech Corp. It trades about -0.07 of its total potential returns per unit of risk. CU Tech Corp is currently generating about -0.04 per unit of volatility. If you would invest 297,000 in CU Tech Corp on November 7, 2024 and sell it today you would lose (2,000) from holding CU Tech Corp or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WONIK Materials CoLtd vs. CU Tech Corp
Performance |
| Timeline |
| WONIK Materials CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CU Tech Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WONIK Materials and CU Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and CU Tech
The main advantage of trading using opposite WONIK Materials and CU Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials position performs unexpectedly, CU Tech 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 CU Tech will offset losses from the drop in CU Tech's long position.The idea behind WONIK Materials CoLtd and CU Tech Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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