Correlation Between Woori Technology and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Dongbu Steel 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 Dongbu Steel 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 Dongbu Steel Co, you can compare the effects of market volatilities on Woori Technology and Dongbu Steel 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 Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Dongbu Steel.
Diversification Opportunities for Woori Technology and Dongbu Steel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woori and Dongbu is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel 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 Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of Woori Technology i.e., Woori Technology and Dongbu Steel go up and down completely randomly.
Pair Corralation between Woori Technology and Dongbu Steel
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 1.94 times more return on investment than Dongbu Steel. However, Woori Technology is 1.94 times more volatile than Dongbu Steel Co. It trades about 0.07 of its potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.02 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology Investment vs. Dongbu Steel Co
Performance |
| Timeline |
| Woori Technology Inv |
| Dongbu Steel |
Woori Technology and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Dongbu Steel
The main advantage of trading using opposite Woori Technology and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Dongbu Steel 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 Dongbu Steel will offset losses from the drop in Dongbu Steel'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 |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Hanwha Solutions | Dongbu Steel vs. Lotte Chemical Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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