Correlation Between NewFlex Technology and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both NewFlex 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 NewFlex 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 NewFlex Technology Co and Woorim Machinery Co, you can compare the effects of market volatilities on NewFlex 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 NewFlex Technology with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and Woorim Machinery.
Diversification Opportunities for NewFlex Technology and Woorim Machinery
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NewFlex and Woorim is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 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 NewFlex Technology i.e., NewFlex Technology and Woorim Machinery go up and down completely randomly.
Pair Corralation between NewFlex Technology and Woorim Machinery
Assuming the 90 days trading horizon NewFlex Technology Co is expected to generate 1.26 times more return on investment than Woorim Machinery. However, NewFlex Technology is 1.26 times more volatile than Woorim Machinery Co. It trades about 0.16 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 499,500 in NewFlex Technology Co on October 15, 2024 and sell it today you would earn a total of 57,500 from holding NewFlex Technology Co or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewFlex Technology Co vs. Woorim Machinery Co
Performance |
| Timeline |
| NewFlex Technology |
| Woorim Machinery |
NewFlex Technology and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewFlex Technology and Woorim Machinery
The main advantage of trading using opposite NewFlex Technology and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex 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.| NewFlex Technology vs. Dongkuk Structures Construction | NewFlex Technology vs. Keyang Electric Machinery | NewFlex Technology vs. Hanshin Construction Co | NewFlex Technology vs. InfoBank |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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