Correlation Between Woori Technology and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy, you can compare the effects of market volatilities on Woori Technology and Namyang Dairy 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 Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Namyang Dairy.
Diversification Opportunities for Woori Technology and Namyang Dairy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Namyang is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Namyang Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy 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 Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy has no effect on the direction of Woori Technology i.e., Woori Technology and Namyang Dairy go up and down completely randomly.
Pair Corralation between Woori Technology and Namyang Dairy
Assuming the 90 days trading horizon Woori Technology is expected to generate 1.34 times less return on investment than Namyang Dairy. In addition to that, Woori Technology is 1.82 times more volatile than Namyang Dairy. It trades about 0.14 of its total potential returns per unit of risk. Namyang Dairy is currently generating about 0.35 per unit of volatility. If you would invest 5,870,000 in Namyang Dairy on October 29, 2024 and sell it today you would earn a total of 730,000 from holding Namyang Dairy or generate 12.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology Investment vs. Namyang Dairy
Performance |
| Timeline |
| Woori Technology Inv |
| Namyang Dairy |
Woori Technology and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Namyang Dairy
The main advantage of trading using opposite Woori Technology and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Woori Technology vs. Humasis Co | Woori Technology vs. JUSUNG ENGINEERING Co | Woori Technology vs. Winix Inc | Woori Technology vs. AfreecaTV Co |
| Namyang Dairy vs. Busan Industrial Co | Namyang Dairy vs. Busan Ind | Namyang Dairy vs. RPBio Inc | Namyang Dairy vs. Finebesteel |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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