Correlation Between Woori Technology and LG Household
Can any of the company-specific risk be diversified away by investing in both Woori Technology and LG Household 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 LG Household 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 LG Household Healthcare, you can compare the effects of market volatilities on Woori Technology and LG Household 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 LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and LG Household.
Diversification Opportunities for Woori Technology and LG Household
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woori and 051905 is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare 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 LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Woori Technology i.e., Woori Technology and LG Household go up and down completely randomly.
Pair Corralation between Woori Technology and LG Household
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 2.15 times more return on investment than LG Household. However, Woori Technology is 2.15 times more volatile than LG Household Healthcare. It trades about 0.06 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.06 per unit of risk. If you would invest 425,000 in Woori Technology Investment on August 28, 2024 and sell it today you would earn a total of 525,000 from holding Woori Technology Investment or generate 123.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Technology Investment vs. LG Household Healthcare
Performance |
| Timeline |
| Woori Technology Inv |
| LG Household Healthcare |
Woori Technology and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and LG Household
The main advantage of trading using opposite Woori Technology and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household's long position.| Woori Technology vs. Humasis Co | Woori Technology vs. JUSUNG ENGINEERING Co | Woori Technology vs. Winix Inc | Woori Technology vs. AfreecaTV Co |
| LG Household vs. Jeil Steel Mfg | LG Household vs. Dongbu Steel Co | LG Household vs. Cuckoo Homesys Co | LG Household vs. Daejung Chemicals Metals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stocks Directory Find actively traded stocks across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |