Correlation Between Woori Technology and Bukwang Pharm
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Bukwang Pharm 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 Bukwang Pharm 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 Bukwang Pharm, you can compare the effects of market volatilities on Woori Technology and Bukwang Pharm 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 Bukwang Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Bukwang Pharm.
Diversification Opportunities for Woori Technology and Bukwang Pharm
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woori and Bukwang is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Bukwang Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukwang Pharm 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 Bukwang Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukwang Pharm has no effect on the direction of Woori Technology i.e., Woori Technology and Bukwang Pharm go up and down completely randomly.
Pair Corralation between Woori Technology and Bukwang Pharm
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 2.16 times more return on investment than Bukwang Pharm. However, Woori Technology is 2.16 times more volatile than Bukwang Pharm. It trades about 0.07 of its potential returns per unit of risk. Bukwang Pharm is currently generating about -0.04 per unit of risk. If you would invest 393,500 in Woori Technology Investment on September 12, 2024 and sell it today you would earn a total of 417,500 from holding Woori Technology Investment or generate 106.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Woori Technology Investment vs. Bukwang Pharm
Performance |
| Timeline |
| Woori Technology Inv |
| Bukwang Pharm |
Woori Technology and Bukwang Pharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Bukwang Pharm
The main advantage of trading using opposite Woori Technology and Bukwang Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Bukwang Pharm 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 Bukwang Pharm will offset losses from the drop in Bukwang Pharm's long position.| Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group | Woori Technology vs. Hana Financial | Woori Technology vs. Woori Financial Group |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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