Correlation Between Woori Technology and Han Kook
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Han Kook 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 Han Kook 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 Han Kook Steel, you can compare the effects of market volatilities on Woori Technology and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Han Kook.
Diversification Opportunities for Woori Technology and Han Kook
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woori and Han is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of Woori Technology i.e., Woori Technology and Han Kook go up and down completely randomly.
Pair Corralation between Woori Technology and Han Kook
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 1.56 times more return on investment than Han Kook. However, Woori Technology is 1.56 times more volatile than Han Kook Steel. It trades about 0.04 of its potential returns per unit of risk. Han Kook Steel is currently generating about -0.03 per unit of risk. If you would invest 726,000 in Woori Technology Investment on September 2, 2024 and sell it today you would earn a total of 152,000 from holding Woori Technology Investment or generate 20.94% 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. Han Kook Steel
Performance |
| Timeline |
| Woori Technology Inv |
| Han Kook Steel |
Woori Technology and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Han Kook
The main advantage of trading using opposite Woori Technology and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Woori Technology vs. Samsung Electronics Co | Woori Technology vs. Samsung Electronics Co | Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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