Correlation Between Miwon Chemicals and Wooyang
Can any of the company-specific risk be diversified away by investing in both Miwon Chemicals and Wooyang 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 Chemicals and Wooyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miwon Chemicals Co and Wooyang Co, you can compare the effects of market volatilities on Miwon Chemicals and Wooyang 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 Chemicals with a short position of Wooyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemicals and Wooyang.
Diversification Opportunities for Miwon Chemicals and Wooyang
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Miwon and Wooyang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemicals Co and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang and Miwon Chemicals 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 Chemicals Co are associated (or correlated) with Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of Miwon Chemicals i.e., Miwon Chemicals and Wooyang go up and down completely randomly.
Pair Corralation between Miwon Chemicals and Wooyang
Assuming the 90 days trading horizon Miwon Chemicals Co is expected to generate 0.35 times more return on investment than Wooyang. However, Miwon Chemicals Co is 2.89 times less risky than Wooyang. It trades about -0.08 of its potential returns per unit of risk. Wooyang Co is currently generating about -0.36 per unit of risk. If you would invest 7,990,000 in Miwon Chemicals Co on September 1, 2024 and sell it today you would lose (140,000) from holding Miwon Chemicals Co or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Miwon Chemicals Co vs. Wooyang Co
Performance |
| Timeline |
| Miwon Chemicals |
| Wooyang |
Miwon Chemicals and Wooyang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miwon Chemicals and Wooyang
The main advantage of trading using opposite Miwon Chemicals and Wooyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miwon Chemicals position performs unexpectedly, Wooyang 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 Wooyang will offset losses from the drop in Wooyang's long position.| Miwon Chemicals vs. AptaBio Therapeutics | Miwon Chemicals vs. Daewoo SBI SPAC | Miwon Chemicals vs. Dream Security co | Miwon Chemicals vs. Microfriend |
| Wooyang vs. Maeil Dairies Co | Wooyang vs. Busan Industrial Co | Wooyang vs. Busan Ind | Wooyang vs. Mirae Asset Daewoo |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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