Correlation Between HB Technology and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both HB Technology and Woorim 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 HB Technology and Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HB Technology TD and Woorim Machinery Co, you can compare the effects of market volatilities on HB Technology and Woorim 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 HB Technology with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of HB Technology and Woorim Machinery.
Diversification Opportunities for HB Technology and Woorim Machinery
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 078150 and Woorim is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery and HB 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 HB Technology TD are associated (or correlated) with Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of HB Technology i.e., HB Technology and Woorim Machinery go up and down completely randomly.
Pair Corralation between HB Technology and Woorim Machinery
Assuming the 90 days trading horizon HB Technology TD is expected to generate 1.01 times more return on investment than Woorim Machinery. However, HB Technology is 1.01 times more volatile than Woorim Machinery Co. It trades about 0.42 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about 0.16 per unit of risk. If you would invest 194,200 in HB Technology TD on October 15, 2024 and sell it today you would earn a total of 56,300 from holding HB Technology TD or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HB Technology TD vs. Woorim Machinery Co
Performance |
| Timeline |
| HB Technology TD |
| Woorim Machinery |
HB Technology and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HB Technology and Woorim Machinery
The main advantage of trading using opposite HB Technology and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HB Technology position performs unexpectedly, Woorim 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| HB Technology vs. Sungchang Autotech Co | HB Technology vs. Kolon Plastics | HB Technology vs. Hyosung Advanced Materials | HB Technology vs. PI Advanced Materials |
| Woorim Machinery vs. Nice Information Telecommunication | Woorim Machinery vs. NewFlex Technology Co | Woorim Machinery vs. Alton Sports CoLtd | Woorim Machinery vs. HB Technology TD |
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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