Correlation Between Home Center and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Home Center 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 Home Center and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Center Holdings and Woori Technology, you can compare the effects of market volatilities on Home Center 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 Home Center with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Center and Woori Technology.
Diversification Opportunities for Home Center and Woori Technology
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Woori is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Home Center Holdings and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Home Center 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 Home Center Holdings 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 Home Center i.e., Home Center and Woori Technology go up and down completely randomly.
Pair Corralation between Home Center and Woori Technology
Assuming the 90 days trading horizon Home Center Holdings is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Home Center Holdings is 1.41 times less risky than Woori Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 219,000 in Woori Technology on September 3, 2024 and sell it today you would earn a total of 3,500 from holding Woori Technology or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Center Holdings vs. Woori Technology
Performance |
| Timeline |
| Home Center Holdings |
| Woori Technology |
Home Center and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Center and Woori Technology
The main advantage of trading using opposite Home Center and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Center 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.| Home Center vs. Aprogen Healthcare Games | Home Center vs. Sejong Telecom | Home Center vs. Daishin Information Communications | Home Center vs. Hanjin Transportation Co |
| Woori Technology vs. GS Retail Co | Woori Technology vs. Neungyule Education | Woori Technology vs. KMH Hitech Co | Woori Technology vs. Sungchang Autotech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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