Correlation Between Woori Technology and Home Center
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Home Center 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 Woori Technology and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology and Home Center Holdings, you can compare the effects of market volatilities on Woori Technology and Home Center 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 Woori Technology with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Home Center.
Diversification Opportunities for Woori Technology and Home Center
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Home is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and Woori Technology 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 Woori Technology are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of Woori Technology i.e., Woori Technology and Home Center go up and down completely randomly.
Pair Corralation between Woori Technology and Home Center
Assuming the 90 days trading horizon Woori Technology is expected to generate 1.41 times more return on investment than Home Center. However, Woori Technology is 1.41 times more volatile than Home Center Holdings. It trades about 0.04 of its potential returns per unit of risk. Home Center Holdings is currently generating about -0.1 per unit of risk. If you would invest 219,000 in Woori Technology on September 3, 2024 and sell it today you would earn a total of 3,500 from holding Woori Technology or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology vs. Home Center Holdings
Performance |
| Timeline |
| Woori Technology |
| Home Center Holdings |
Woori Technology and Home Center Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Home Center
The main advantage of trading using opposite Woori Technology and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.| Woori Technology vs. GS Retail Co | Woori Technology vs. Neungyule Education | Woori Technology vs. KMH Hitech Co | Woori Technology vs. Sungchang Autotech Co |
| Home Center vs. Aprogen Healthcare Games | Home Center vs. Sejong Telecom | Home Center vs. Daishin Information Communications | Home Center vs. Hanjin Transportation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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