Correlation Between Woori Technology and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Bohae Brewery 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 Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology Investment and Bohae Brewery, you can compare the effects of market volatilities on Woori Technology and Bohae Brewery 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 Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Bohae Brewery.
Diversification Opportunities for Woori Technology and Bohae Brewery
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woori and Bohae is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery 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 Investment are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Woori Technology i.e., Woori Technology and Bohae Brewery go up and down completely randomly.
Pair Corralation between Woori Technology and Bohae Brewery
Assuming the 90 days trading horizon Woori Technology Investment is expected to under-perform the Bohae Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Woori Technology Investment is 1.54 times less risky than Bohae Brewery. The stock trades about -0.02 of its potential returns per unit of risk. The Bohae Brewery is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 42,300 in Bohae Brewery on September 1, 2024 and sell it today you would earn a total of 4,300 from holding Bohae Brewery or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology Investment vs. Bohae Brewery
Performance |
| Timeline |
| Woori Technology Inv |
| Bohae Brewery |
Woori Technology and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Bohae Brewery
The main advantage of trading using opposite Woori Technology and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Woori Technology vs. Samsung Electronics Co | Woori Technology vs. Samsung Electronics Co | Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group |
| Bohae Brewery vs. Korea Real Estate | Bohae Brewery vs. Korea Ratings Co | Bohae Brewery vs. IQuest Co | Bohae Brewery vs. Wonbang Tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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