Correlation Between Woori Technology and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on Woori Technology and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Korean Drug.
Diversification Opportunities for Woori Technology and Korean Drug
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Korean is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Woori Technology i.e., Woori Technology and Korean Drug go up and down completely randomly.
Pair Corralation between Woori Technology and Korean Drug
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 2.41 times more return on investment than Korean Drug. However, Woori Technology is 2.41 times more volatile than Korean Drug Co. It trades about 0.04 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.03 per unit of risk. If you would invest 468,500 in Woori Technology Investment on November 2, 2024 and sell it today you would earn a total of 281,500 from holding Woori Technology Investment or generate 60.09% 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. Korean Drug Co
Performance |
| Timeline |
| Woori Technology Inv |
| Korean Drug |
Woori Technology and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Korean Drug
The main advantage of trading using opposite Woori Technology and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Woori Technology vs. Humasis Co | Woori Technology vs. JUSUNG ENGINEERING Co | Woori Technology vs. Winix Inc | Woori Technology vs. AfreecaTV Co |
| Korean Drug vs. Jeong Moon Information | Korean Drug vs. SK Chemicals Co | Korean Drug vs. Daishin Information Communications | Korean Drug vs. Sewoon Medical 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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