Correlation Between Woori Technology and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Lion Chemtech 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 Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology and Lion Chemtech Co, you can compare the effects of market volatilities on Woori Technology and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Lion Chemtech.
Diversification Opportunities for Woori Technology and Lion Chemtech
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woori and Lion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Woori Technology i.e., Woori Technology and Lion Chemtech go up and down completely randomly.
Pair Corralation between Woori Technology and Lion Chemtech
Assuming the 90 days trading horizon Woori Technology is expected to generate 3.57 times less return on investment than Lion Chemtech. But when comparing it to its historical volatility, Woori Technology is 1.07 times less risky than Lion Chemtech. It trades about 0.01 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 240,000 in Lion Chemtech Co on August 29, 2024 and sell it today you would earn a total of 3,500 from holding Lion Chemtech Co or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology vs. Lion Chemtech Co
Performance |
| Timeline |
| Woori Technology |
| Lion Chemtech |
Woori Technology and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Lion Chemtech
The main advantage of trading using opposite Woori Technology and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Woori Technology vs. Korea Real Estate | Woori Technology vs. Korea Ratings Co | Woori Technology vs. IQuest Co | Woori Technology vs. Wonbang Tech Co |
| Lion Chemtech vs. Moonbae Steel | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. J Steel Co | Lion Chemtech vs. DONGKUK STEEL MILL |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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