Correlation Between Raontech and ENERGYMACHINERY KOREA
Can any of the company-specific risk be diversified away by investing in both Raontech and ENERGYMACHINERY KOREA 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 Raontech and ENERGYMACHINERY KOREA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raontech and ENERGYMACHINERY KOREA CoLtd, you can compare the effects of market volatilities on Raontech and ENERGYMACHINERY KOREA 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 Raontech with a short position of ENERGYMACHINERY KOREA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raontech and ENERGYMACHINERY KOREA.
Diversification Opportunities for Raontech and ENERGYMACHINERY KOREA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Raontech and ENERGYMACHINERY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Raontech and ENERGYMACHINERY KOREA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGYMACHINERY KOREA and Raontech 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 Raontech are associated (or correlated) with ENERGYMACHINERY KOREA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGYMACHINERY KOREA has no effect on the direction of Raontech i.e., Raontech and ENERGYMACHINERY KOREA go up and down completely randomly.
Pair Corralation between Raontech and ENERGYMACHINERY KOREA
Assuming the 90 days trading horizon Raontech is expected to generate 1.4 times less return on investment than ENERGYMACHINERY KOREA. In addition to that, Raontech is 1.21 times more volatile than ENERGYMACHINERY KOREA CoLtd. It trades about 0.02 of its total potential returns per unit of risk. ENERGYMACHINERY KOREA CoLtd is currently generating about 0.03 per unit of volatility. If you would invest 219,500 in ENERGYMACHINERY KOREA CoLtd on October 14, 2024 and sell it today you would earn a total of 8,500 from holding ENERGYMACHINERY KOREA CoLtd or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raontech vs. ENERGYMACHINERY KOREA CoLtd
Performance |
| Timeline |
| Raontech |
| ENERGYMACHINERY KOREA |
Raontech and ENERGYMACHINERY KOREA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raontech and ENERGYMACHINERY KOREA
The main advantage of trading using opposite Raontech and ENERGYMACHINERY KOREA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raontech position performs unexpectedly, ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA will offset losses from the drop in ENERGYMACHINERY KOREA's long position.| Raontech vs. Cheryong Industrial CoLtd | Raontech vs. Daiyang Metal Co | Raontech vs. Dongil Metal Co | Raontech vs. Mgame Corp |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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