Correlation Between Wonbang Tech and Daekyung Machinery
Can any of the company-specific risk be diversified away by investing in both Wonbang Tech and Daekyung Machinery 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 Wonbang Tech and Daekyung Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonbang Tech Co and Daekyung Machinery Engineering, you can compare the effects of market volatilities on Wonbang Tech and Daekyung Machinery 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 Wonbang Tech with a short position of Daekyung Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonbang Tech and Daekyung Machinery.
Diversification Opportunities for Wonbang Tech and Daekyung Machinery
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wonbang and Daekyung is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wonbang Tech Co and Daekyung Machinery Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daekyung Machinery and Wonbang Tech 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 Wonbang Tech Co are associated (or correlated) with Daekyung Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daekyung Machinery has no effect on the direction of Wonbang Tech i.e., Wonbang Tech and Daekyung Machinery go up and down completely randomly.
Pair Corralation between Wonbang Tech and Daekyung Machinery
Assuming the 90 days trading horizon Wonbang Tech Co is expected to under-perform the Daekyung Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Wonbang Tech Co is 1.06 times less risky than Daekyung Machinery. The stock trades about -0.11 of its potential returns per unit of risk. The Daekyung Machinery Engineering is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 41,000 in Daekyung Machinery Engineering on September 15, 2024 and sell it today you would earn a total of 10,500 from holding Daekyung Machinery Engineering or generate 25.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 79.66% |
Values | Daily Returns |
Wonbang Tech Co vs. Daekyung Machinery Engineering
Performance |
Timeline |
Wonbang Tech |
Daekyung Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Wonbang Tech and Daekyung Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wonbang Tech and Daekyung Machinery
The main advantage of trading using opposite Wonbang Tech and Daekyung Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonbang Tech position performs unexpectedly, Daekyung Machinery 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 Daekyung Machinery will offset losses from the drop in Daekyung Machinery's long position.Wonbang Tech vs. Samsung Electronics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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