Correlation Between I-Components and WOOJUNG BIO

Can any of the company-specific risk be diversified away by investing in both I-Components and WOOJUNG BIO 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 I-Components and WOOJUNG BIO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between i Components Co and WOOJUNG BIO, you can compare the effects of market volatilities on I-Components and WOOJUNG BIO 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 I-Components with a short position of WOOJUNG BIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and WOOJUNG BIO.

Diversification Opportunities for I-Components and WOOJUNG BIO

-0.36

Correlation Coefficient

I-Components  WOOJUNG BIO

Very good diversification

The 3 months correlation between I-Components and WOOJUNG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and WOOJUNG BIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOJUNG BIO and I-Components 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 i Components Co are associated (or correlated) with WOOJUNG BIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOJUNG BIO has no effect on the direction of I-Components i.e., I-Components and WOOJUNG BIO go up and down completely randomly.

Pair Corralation between I-Components and WOOJUNG BIO

Assuming the 90 days trading horizon i Components Co is expected to generate 0.4 times more return on investment than WOOJUNG BIO. However, i Components Co is 2.52 times less risky than WOOJUNG BIO. It trades about -0.01 of its potential returns per unit of risk. WOOJUNG BIO is currently generating about -0.13 per unit of risk. If you would invest  479,000  in i Components Co on September 27, 2024 and sell it today you would lose (8,500) from holding i Components Co or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

i Components Co  vs.  WOOJUNG BIO

i Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days i Components Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, I-Components is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WOOJUNG BIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WOOJUNG BIO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with I-Components and WOOJUNG BIO

The main advantage of trading using opposite I-Components and WOOJUNG BIO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, WOOJUNG BIO 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 WOOJUNG BIO will offset losses from the drop in WOOJUNG BIO's long position.

The idea behind i Components Co and WOOJUNG BIO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.