Correlation Between Dongwoo Farm and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm 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 Dongwoo Farm and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwoo Farm To and Woori Technology, you can compare the effects of market volatilities on Dongwoo Farm 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 Dongwoo Farm with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Woori Technology.
Diversification Opportunities for Dongwoo Farm and Woori Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongwoo and Woori is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Dongwoo Farm 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 Dongwoo Farm To 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 Dongwoo Farm i.e., Dongwoo Farm and Woori Technology go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Woori Technology
Assuming the 90 days trading horizon Dongwoo Farm To is expected to generate 0.38 times more return on investment than Woori Technology. However, Dongwoo Farm To is 2.63 times less risky than Woori Technology. It trades about 0.12 of its potential returns per unit of risk. Woori Technology is currently generating about -0.24 per unit of risk. If you would invest 184,600 in Dongwoo Farm To on September 14, 2024 and sell it today you would earn a total of 7,200 from holding Dongwoo Farm To or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwoo Farm To vs. Woori Technology
Performance |
| Timeline |
| Dongwoo Farm To |
| Woori Technology |
Dongwoo Farm and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Woori Technology
The main advantage of trading using opposite Dongwoo Farm and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm 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.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food |
| Woori Technology vs. Cube Entertainment | Woori Technology vs. Dreamus Company | Woori Technology vs. LG Energy Solution | Woori Technology vs. Dongwon System |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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