Correlation Between Woori Technology and DHP Korea
Can any of the company-specific risk be diversified away by investing in both Woori Technology and DHP Korea 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 DHP Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology and DHP Korea Co, you can compare the effects of market volatilities on Woori Technology and DHP Korea 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 DHP Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and DHP Korea.
Diversification Opportunities for Woori Technology and DHP Korea
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woori and DHP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and DHP Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHP Korea 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 DHP Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHP Korea has no effect on the direction of Woori Technology i.e., Woori Technology and DHP Korea go up and down completely randomly.
Pair Corralation between Woori Technology and DHP Korea
Assuming the 90 days trading horizon Woori Technology is expected to generate 1.42 times more return on investment than DHP Korea. However, Woori Technology is 1.42 times more volatile than DHP Korea Co. It trades about -0.11 of its potential returns per unit of risk. DHP Korea Co is currently generating about -0.2 per unit of risk. If you would invest 215,000 in Woori Technology on September 13, 2024 and sell it today you would lose (41,000) from holding Woori Technology or give up 19.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology vs. DHP Korea Co
Performance |
| Timeline |
| Woori Technology |
| DHP Korea |
Woori Technology and DHP Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and DHP Korea
The main advantage of trading using opposite Woori Technology and DHP Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, DHP Korea 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 DHP Korea will offset losses from the drop in DHP Korea's long position.| Woori Technology vs. Dongwoo Farm To | Woori Technology vs. KEPCO Engineering Construction | Woori Technology vs. Kumho Industrial Co | Woori Technology vs. Formetal Co |
| DHP Korea vs. Humasis Co | DHP Korea vs. Access Bio | DHP Korea vs. DRGEM | DHP Korea vs. Busan Industrial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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