Correlation Between Wireless Power and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both Wireless Power and Hannong Chemicals 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 Wireless Power and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wireless Power Amplifier and Hannong Chemicals, you can compare the effects of market volatilities on Wireless Power and Hannong Chemicals 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 Wireless Power with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wireless Power and Hannong Chemicals.
Diversification Opportunities for Wireless Power and Hannong Chemicals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wireless and Hannong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wireless Power Amplifier and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and Wireless Power 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 Wireless Power Amplifier are associated (or correlated) with Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of Wireless Power i.e., Wireless Power and Hannong Chemicals go up and down completely randomly.
Pair Corralation between Wireless Power and Hannong Chemicals
Assuming the 90 days trading horizon Wireless Power Amplifier is expected to under-perform the Hannong Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Wireless Power Amplifier is 1.56 times less risky than Hannong Chemicals. The stock trades about -0.03 of its potential returns per unit of risk. The Hannong Chemicals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,694,785 in Hannong Chemicals on September 4, 2024 and sell it today you would lose (253,785) from holding Hannong Chemicals or give up 14.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wireless Power Amplifier vs. Hannong Chemicals
Performance |
| Timeline |
| Wireless Power Amplifier |
| Hannong Chemicals |
Wireless Power and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wireless Power and Hannong Chemicals
The main advantage of trading using opposite Wireless Power and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wireless Power position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| Wireless Power vs. Daejoo Electronic Materials | Wireless Power vs. Parksystems Corp | Wireless Power vs. BH Co | Wireless Power vs. Partron Co |
| Hannong Chemicals vs. Korea Petro Chemical | Hannong Chemicals vs. LAKE MATERIALS LTD | Hannong Chemicals vs. Iljin Materials Co | Hannong Chemicals vs. TOPMATERIAL LTD |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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