Correlation Between Woori Technology and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Solution Advanced 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 Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology and Solution Advanced Technology, you can compare the effects of market volatilities on Woori Technology and Solution Advanced 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 Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Solution Advanced.
Diversification Opportunities for Woori Technology and Solution Advanced
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Solution is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced 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 Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Woori Technology i.e., Woori Technology and Solution Advanced go up and down completely randomly.
Pair Corralation between Woori Technology and Solution Advanced
Assuming the 90 days trading horizon Woori Technology is expected to generate 1.05 times more return on investment than Solution Advanced. However, Woori Technology is 1.05 times more volatile than Solution Advanced Technology. It trades about 0.31 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about -0.17 per unit of risk. If you would invest 177,600 in Woori Technology on October 20, 2024 and sell it today you would earn a total of 26,900 from holding Woori Technology or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology vs. Solution Advanced Technology
Performance |
| Timeline |
| Woori Technology |
| Solution Advanced |
Woori Technology and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Solution Advanced
The main advantage of trading using opposite Woori Technology and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| Woori Technology vs. DB Financial Investment | Woori Technology vs. Genie Music | Woori Technology vs. Daelim Trading Co | Woori Technology vs. SBI Investment KOREA |
| Solution Advanced vs. SEOWONINTECHCoLtd | Solution Advanced vs. Moonbae Steel | Solution Advanced vs. Vitzro Tech Co | Solution Advanced vs. Seah Steel Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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