Correlation Between Woori Technology and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Kumho Industrial 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 Kumho Industrial 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 Kumho Industrial Co, you can compare the effects of market volatilities on Woori Technology and Kumho Industrial 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 Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Kumho Industrial.
Diversification Opportunities for Woori Technology and Kumho Industrial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woori and Kumho is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Industrial 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 Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Woori Technology i.e., Woori Technology and Kumho Industrial go up and down completely randomly.
Pair Corralation between Woori Technology and Kumho Industrial
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 3.14 times more return on investment than Kumho Industrial. However, Woori Technology is 3.14 times more volatile than Kumho Industrial Co. It trades about 0.14 of its potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.5 per unit of risk. If you would invest 721,000 in Woori Technology Investment on October 22, 2024 and sell it today you would earn a total of 58,000 from holding Woori Technology Investment or generate 8.04% 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 Investment vs. Kumho Industrial Co
Performance |
| Timeline |
| Woori Technology Inv |
| Kumho Industrial |
Woori Technology and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Kumho Industrial
The main advantage of trading using opposite Woori Technology and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Kumho Industrial 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Woori Technology vs. Humasis Co | Woori Technology vs. JUSUNG ENGINEERING Co | Woori Technology vs. Winix Inc | Woori Technology vs. AfreecaTV Co |
| Kumho Industrial vs. Kg Chemical | Kumho Industrial vs. Kukdo Chemical Co | Kumho Industrial vs. Hanil Chemical Ind | Kumho Industrial vs. SK Chemicals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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