Correlation Between Miwon Chemicals and QUALITAS SEMICONDUCTOR

Can any of the company-specific risk be diversified away by investing in both Miwon Chemicals and QUALITAS SEMICONDUCTOR 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 Miwon Chemicals and QUALITAS SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Miwon Chemicals Co and QUALITAS SEMICONDUCTOR LTD, you can compare the effects of market volatilities on Miwon Chemicals and QUALITAS SEMICONDUCTOR 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 Miwon Chemicals with a short position of QUALITAS SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miwon Chemicals and QUALITAS SEMICONDUCTOR.

Diversification Opportunities for Miwon Chemicals and QUALITAS SEMICONDUCTOR

0.66

Correlation Coefficient

Miwon Chemicals  QUALITAS SEMICONDUCTOR

Poor diversification

The 3 months correlation between Miwon and QUALITAS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemicals Co and QUALITAS SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALITAS SEMICONDUCTOR and Miwon Chemicals 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 Miwon Chemicals Co are associated (or correlated) with QUALITAS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALITAS SEMICONDUCTOR has no effect on the direction of Miwon Chemicals i.e., Miwon Chemicals and QUALITAS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Miwon Chemicals and QUALITAS SEMICONDUCTOR

Assuming the 90 days trading horizon Miwon Chemicals Co is expected to generate 0.17 times more return on investment than QUALITAS SEMICONDUCTOR. However, Miwon Chemicals Co is 5.84 times less risky than QUALITAS SEMICONDUCTOR. It trades about -0.04 of its potential returns per unit of risk. QUALITAS SEMICONDUCTOR LTD is currently generating about -0.09 per unit of risk. If you would invest  8,010,000  in Miwon Chemicals Co on September 5, 2024 and sell it today you would lose (170,000) from holding Miwon Chemicals Co or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Miwon Chemicals Co  vs.  QUALITAS SEMICONDUCTOR LTD

Miwon Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

QUALITAS SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QUALITAS SEMICONDUCTOR LTD 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 Miwon Chemicals and QUALITAS SEMICONDUCTOR

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

The idea behind Miwon Chemicals Co and QUALITAS SEMICONDUCTOR LTD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.