Correlation Between Hurum and WIZ P
Can any of the company-specific risk be diversified away by investing in both Hurum and WIZ P 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 Hurum and WIZ P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hurum Co and WIZ P Inc, you can compare the effects of market volatilities on Hurum and WIZ P 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 Hurum with a short position of WIZ P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hurum and WIZ P.
Diversification Opportunities for Hurum and WIZ P
Poor diversification
The 3 months correlation between Hurum and WIZ is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and WIZ P Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIZ P Inc and Hurum 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 Hurum Co are associated (or correlated) with WIZ P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIZ P Inc has no effect on the direction of Hurum i.e., Hurum and WIZ P go up and down completely randomly.
Pair Corralation between Hurum and WIZ P
Assuming the 90 days trading horizon Hurum Co is expected to under-perform the WIZ P. In addition to that, Hurum is 1.43 times more volatile than WIZ P Inc. It trades about -0.05 of its total potential returns per unit of risk. WIZ P Inc is currently generating about -0.05 per unit of volatility. If you would invest 88,600 in WIZ P Inc on August 31, 2024 and sell it today you would lose (28,000) from holding WIZ P Inc or give up 31.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hurum Co vs. WIZ P Inc
Performance |
| Timeline |
| Hurum |
| WIZ P Inc |
Hurum and WIZ P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hurum and WIZ P
The main advantage of trading using opposite Hurum and WIZ P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurum position performs unexpectedly, WIZ P 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 WIZ P will offset losses from the drop in WIZ P's long position.| Hurum vs. Shinsegae Information Communication | Hurum vs. Korea Computer | Hurum vs. LG Display Co | Hurum vs. Sangsangin Investment Securities |
| WIZ P vs. Jeju Air Co | WIZ P vs. CJ Seafood Corp | WIZ P vs. Hyundai Green Food | WIZ P vs. Ssangyong Information Communication |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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