Correlation Between Woori Technology and Dreamus
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Dreamus 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 Dreamus 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 Dreamus Company, you can compare the effects of market volatilities on Woori Technology and Dreamus 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 Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Dreamus.
Diversification Opportunities for Woori Technology and Dreamus
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woori and Dreamus is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company 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 Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Woori Technology i.e., Woori Technology and Dreamus go up and down completely randomly.
Pair Corralation between Woori Technology and Dreamus
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 1.28 times more return on investment than Dreamus. However, Woori Technology is 1.28 times more volatile than Dreamus Company. It trades about 0.04 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.03 per unit of risk. If you would invest 502,000 in Woori Technology Investment on October 28, 2024 and sell it today you would earn a total of 248,000 from holding Woori Technology Investment or generate 49.4% 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. Dreamus Company
Performance |
| Timeline |
| Woori Technology Inv |
| Dreamus Company |
Woori Technology and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Dreamus
The main advantage of trading using opposite Woori Technology and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| Woori Technology vs. Samsung Electronics Co | Woori Technology vs. Samsung Electronics Co | Woori Technology vs. SK Hynix | Woori Technology vs. HMM Co |
| Dreamus vs. Hanjin Transportation Co | Dreamus vs. Homecast CoLtd | Dreamus vs. Hannong Chemicals | Dreamus vs. Guyoung Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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