Correlation Between Miwon Chemical and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Miwon Chemical and Cheryong Industrial 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 Miwon Chemical and Cheryong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemical and Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Miwon Chemical and Cheryong Industrial 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 Miwon Chemical with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemical and Cheryong Industrial.
Diversification Opportunities for Miwon Chemical and Cheryong Industrial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Miwon and Cheryong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemical and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd and Miwon Chemical 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 Miwon Chemical are associated (or correlated) with Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Miwon Chemical i.e., Miwon Chemical and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Miwon Chemical and Cheryong Industrial
Assuming the 90 days trading horizon Miwon Chemical is expected to generate 0.24 times more return on investment than Cheryong Industrial. However, Miwon Chemical is 4.24 times less risky than Cheryong Industrial. It trades about -0.14 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about -0.09 per unit of risk. If you would invest 7,990,000 in Miwon Chemical on August 29, 2024 and sell it today you would lose (210,000) from holding Miwon Chemical or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miwon Chemical vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Miwon Chemical |
| Cheryong Industrial CoLtd |
Miwon Chemical and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemical and Cheryong Industrial
The main advantage of trading using opposite Miwon Chemical and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemical position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Miwon Chemical vs. Cheryong Industrial CoLtd | Miwon Chemical vs. InfoBank | Miwon Chemical vs. Total Soft Bank | Miwon Chemical vs. Seoyon Topmetal Co |
| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Kuk Young GM | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. IL Science 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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