Correlation Between Daedong Steel and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Daedong Steel and Woori Technology 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 Daedong Steel and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Steel Co and Woori Technology Investment, you can compare the effects of market volatilities on Daedong Steel and Woori Technology 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 Daedong Steel with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and Woori Technology.
Diversification Opportunities for Daedong Steel and Woori Technology
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daedong and Woori is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and Woori Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology Inv and Daedong Steel 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 Daedong Steel Co are associated (or correlated) with Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology Inv has no effect on the direction of Daedong Steel i.e., Daedong Steel and Woori Technology go up and down completely randomly.
Pair Corralation between Daedong Steel and Woori Technology
Assuming the 90 days trading horizon Daedong Steel is expected to generate 2.94 times less return on investment than Woori Technology. But when comparing it to its historical volatility, Daedong Steel Co is 1.32 times less risky than Woori Technology. It trades about 0.02 of its potential returns per unit of risk. Woori Technology Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. Woori Technology Investment
Performance |
| Timeline |
| Daedong Steel |
| Woori Technology Inv |
Daedong Steel and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and Woori Technology
The main advantage of trading using opposite Daedong Steel and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. Jeil Steel Mfg | Daedong Steel vs. Wonil Special Steel |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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