Correlation Between NewFlex Technology and Woori Technology

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Can any of the company-specific risk be diversified away by investing in both NewFlex Technology 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 NewFlex Technology and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewFlex Technology Co and Woori Technology, you can compare the effects of market volatilities on NewFlex Technology 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 NewFlex Technology with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and Woori Technology.

Diversification Opportunities for NewFlex Technology and Woori Technology

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between NewFlex and Woori is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and NewFlex 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 NewFlex Technology 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 has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and Woori Technology go up and down completely randomly.

Pair Corralation between NewFlex Technology and Woori Technology

Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, NewFlex Technology Co is 1.25 times less risky than Woori Technology. The stock trades about -0.25 of its potential returns per unit of risk. The Woori Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  235,000  in Woori Technology on August 29, 2024 and sell it today you would lose (500.00) from holding Woori Technology or give up 0.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NewFlex Technology Co  vs.  Woori Technology

 Performance 
       Timeline  
NewFlex Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NewFlex Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NewFlex Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Woori Technology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Woori Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Woori Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

NewFlex Technology and Woori Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NewFlex Technology and Woori Technology

The main advantage of trading using opposite NewFlex Technology and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex Technology 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.
The idea behind NewFlex Technology Co and Woori Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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