Correlation Between Withuspharmaceutical and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both Withuspharmaceutical and InnoTherapy 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 Withuspharmaceutical and InnoTherapy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Withuspharmaceutical CoLtd and InnoTherapy, you can compare the effects of market volatilities on Withuspharmaceutical and InnoTherapy 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 Withuspharmaceutical with a short position of InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Withuspharmaceutical and InnoTherapy.
Diversification Opportunities for Withuspharmaceutical and InnoTherapy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Withuspharmaceutical and InnoTherapy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Withuspharmaceutical CoLtd and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy and Withuspharmaceutical 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 Withuspharmaceutical CoLtd are associated (or correlated) with InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of Withuspharmaceutical i.e., Withuspharmaceutical and InnoTherapy go up and down completely randomly.
Pair Corralation between Withuspharmaceutical and InnoTherapy
Assuming the 90 days trading horizon Withuspharmaceutical is expected to generate 1.0 times less return on investment than InnoTherapy. But when comparing it to its historical volatility, Withuspharmaceutical CoLtd is 1.37 times less risky than InnoTherapy. It trades about 0.17 of its potential returns per unit of risk. InnoTherapy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 769,000 in InnoTherapy on February 8, 2025 and sell it today you would earn a total of 43,000 from holding InnoTherapy or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Withuspharmaceutical CoLtd vs. InnoTherapy
Performance |
| Timeline |
| Withuspharmaceutical |
| InnoTherapy |
Withuspharmaceutical and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Withuspharmaceutical and InnoTherapy
The main advantage of trading using opposite Withuspharmaceutical and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Withuspharmaceutical position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| Withuspharmaceutical vs. Hyunwoo Industrial Co | Withuspharmaceutical vs. LG Chemicals | Withuspharmaceutical vs. Duksan Hi Metal | Withuspharmaceutical vs. Daiyang Metal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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