Correlation Between KEPCO Engineering and Woori Technology
Can any of the company-specific risk be diversified away by investing in both KEPCO Engineering 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 KEPCO Engineering and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KEPCO Engineering Construction and Woori Technology, you can compare the effects of market volatilities on KEPCO Engineering 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 KEPCO Engineering with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEPCO Engineering and Woori Technology.
Diversification Opportunities for KEPCO Engineering and Woori Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KEPCO and Woori is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KEPCO Engineering Construction and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and KEPCO Engineering 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 KEPCO Engineering Construction 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 has no effect on the direction of KEPCO Engineering i.e., KEPCO Engineering and Woori Technology go up and down completely randomly.
Pair Corralation between KEPCO Engineering and Woori Technology
Assuming the 90 days trading horizon KEPCO Engineering Construction is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, KEPCO Engineering Construction is 1.3 times less risky than Woori Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 204,500 in Woori Technology on December 4, 2024 and sell it today you would lose (2,000) from holding Woori Technology or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KEPCO Engineering Construction vs. Woori Technology
Performance |
| Timeline |
| KEPCO Engineering |
| Woori Technology |
KEPCO Engineering and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KEPCO Engineering and Woori Technology
The main advantage of trading using opposite KEPCO Engineering and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEPCO Engineering 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.| KEPCO Engineering vs. Husteel | KEPCO Engineering vs. Sangsangin Investment Securities | KEPCO Engineering vs. BooKook Steel Co | KEPCO Engineering vs. Hyundai BNG Steel |
| Woori Technology vs. Grand Korea Leisure | Woori Technology vs. Alton Sports CoLtd | Woori Technology vs. GS Retail Co | Woori Technology vs. Hannong Chemicals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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