Correlation Between Weiss Korea and River

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

By analyzing existing cross correlation between Weiss Korea Opportunity and River and Mercantile, you can compare the effects of market volatilities on Weiss Korea and River 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 Weiss Korea with a short position of River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiss Korea and River.

Diversification Opportunities for Weiss Korea and River

0.96

Correlation Coefficient

Weiss Korea  River

Almost no diversification

The 3 months correlation between Weiss and River is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile and Weiss Korea 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 Weiss Korea Opportunity are associated (or correlated) with River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Weiss Korea i.e., Weiss Korea and River go up and down completely randomly.

Pair Corralation between Weiss Korea and River

Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to generate 2.75 times more return on investment than River. However, Weiss Korea is 2.75 times more volatile than River and Mercantile. It trades about 0.19 of its potential returns per unit of risk. River and Mercantile is currently generating about 0.42 per unit of risk. If you would invest  12,044  in Weiss Korea Opportunity on April 24, 2025 and sell it today you would earn a total of  2,856  from holding Weiss Korea Opportunity or generate 23.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Weiss Korea Opportunity  vs.  River and Mercantile

Weiss Korea Opportunity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weiss Korea Opportunity are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Weiss Korea unveiled solid returns over the last few months and may actually be approaching a breakup point.

River and Mercantile

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weiss Korea and River

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

The idea behind Weiss Korea Opportunity and River and Mercantile 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.