Correlation Between Woori Technology and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Woori Technology and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Woori Technology and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Seoam Machinery.
Diversification Opportunities for Woori Technology and Seoam Machinery
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and Seoam is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Woori Technology i.e., Woori Technology and Seoam Machinery go up and down completely randomly.
Pair Corralation between Woori Technology and Seoam Machinery
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 2.31 times more return on investment than Seoam Machinery. However, Woori Technology is 2.31 times more volatile than Seoam Machinery Industry. It trades about 0.12 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.13 per unit of risk. If you would invest 828,000 in Woori Technology Investment on August 29, 2024 and sell it today you would earn a total of 100,000 from holding Woori Technology Investment or generate 12.08% 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. Seoam Machinery Industry
Performance |
| Timeline |
| Woori Technology Inv |
| Seoam Machinery Industry |
Woori Technology and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Technology and Seoam Machinery
The main advantage of trading using opposite Woori Technology and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Woori Technology vs. Korea New Network | Woori Technology vs. Dong A Eltek | Woori Technology vs. Dreamus Company | Woori Technology vs. SK Bioscience 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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