Correlation Between SillaJen and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both SillaJen and Wonbang 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 SillaJen and Wonbang Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SillaJen and Wonbang Tech Co, you can compare the effects of market volatilities on SillaJen and Wonbang 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 SillaJen with a short position of Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SillaJen and Wonbang Tech.
Diversification Opportunities for SillaJen and Wonbang Tech
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SillaJen and Wonbang is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SillaJen and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech and SillaJen 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 SillaJen are associated (or correlated) with Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of SillaJen i.e., SillaJen and Wonbang Tech go up and down completely randomly.
Pair Corralation between SillaJen and Wonbang Tech
Assuming the 90 days trading horizon SillaJen is expected to under-perform the Wonbang Tech. But the stock apears to be less risky and, when comparing its historical volatility, SillaJen is 2.0 times less risky than Wonbang Tech. The stock trades about -0.13 of its potential returns per unit of risk. The Wonbang Tech Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,369,000 in Wonbang Tech Co on December 16, 2024 and sell it today you would lose (39,000) from holding Wonbang Tech Co or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SillaJen vs. Wonbang Tech Co
Performance |
| Timeline |
| SillaJen |
| Wonbang Tech |
SillaJen and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SillaJen and Wonbang Tech
The main advantage of trading using opposite SillaJen and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SillaJen position performs unexpectedly, Wonbang 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.| SillaJen vs. Wonbang Tech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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