Correlation Between Woori Technology and Jeju Beer
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Jeju Beer 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 Jeju Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology and Jeju Beer Co, you can compare the effects of market volatilities on Woori Technology and Jeju Beer 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 Jeju Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Jeju Beer.
Diversification Opportunities for Woori Technology and Jeju Beer
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Jeju is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer 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 Jeju Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of Woori Technology i.e., Woori Technology and Jeju Beer go up and down completely randomly.
Pair Corralation between Woori Technology and Jeju Beer
Assuming the 90 days trading horizon Woori Technology is expected to generate 6.53 times less return on investment than Jeju Beer. But when comparing it to its historical volatility, Woori Technology is 1.47 times less risky than Jeju Beer. It trades about 0.03 of its potential returns per unit of risk. Jeju Beer Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 277,000 in Jeju Beer Co on September 3, 2024 and sell it today you would earn a total of 48,000 from holding Jeju Beer Co or generate 17.33% 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. Jeju Beer Co
Performance |
| Timeline |
| Woori Technology |
| Jeju Beer |
Woori Technology and Jeju Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Jeju Beer
The main advantage of trading using opposite Woori Technology and Jeju Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Jeju Beer 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 Jeju Beer will offset losses from the drop in Jeju Beer'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 |
| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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