Correlation Between Kumho Industrial and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Kumho Industrial and Woori Technology 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 Kumho Industrial and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Industrial Co and Woori Technology, you can compare the effects of market volatilities on Kumho Industrial and Woori Technology 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 Kumho Industrial with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Industrial and Woori Technology.
Diversification Opportunities for Kumho Industrial and Woori Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kumho and Woori is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Industrial Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Kumho Industrial 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 Kumho Industrial Co are associated (or correlated) with Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology has no effect on the direction of Kumho Industrial i.e., Kumho Industrial and Woori Technology go up and down completely randomly.
Pair Corralation between Kumho Industrial and Woori Technology
Assuming the 90 days trading horizon Kumho Industrial Co is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Kumho Industrial Co is 1.65 times less risky than Woori Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 131,000 in Woori Technology on September 13, 2024 and sell it today you would earn a total of 39,300 from holding Woori Technology or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Industrial Co vs. Woori Technology
Performance |
| Timeline |
| Kumho Industrial |
| Woori Technology |
Kumho Industrial and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Industrial and Woori Technology
The main advantage of trading using opposite Kumho Industrial and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Industrial position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. Samsung Electronics Co | Kumho Industrial vs. SK Hynix | Kumho Industrial vs. POSCO Holdings |
| Woori Technology vs. Dongwoo Farm To | Woori Technology vs. KEPCO Engineering Construction | Woori Technology vs. Kumho Industrial Co | Woori Technology vs. Formetal Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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