Correlation Between Dongwoo Farm and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Dongwoo Farm 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 Dongwoo Farm and Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Dongwoo Farm 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 Dongwoo Farm with a short position of Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoo Farm and Woorim Machinery.
Diversification Opportunities for Dongwoo Farm and Woorim Machinery
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongwoo and Woorim is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoo Farm To and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 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 Dongwoo Farm i.e., Dongwoo Farm and Woorim Machinery go up and down completely randomly.
Pair Corralation between Dongwoo Farm and Woorim Machinery
Assuming the 90 days trading horizon Dongwoo Farm To is expected to under-perform the Woorim Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Dongwoo Farm To is 2.05 times less risky than Woorim Machinery. The stock trades about -0.16 of its potential returns per unit of risk. The Woorim Machinery Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 512,000 in Woorim Machinery Co on August 25, 2024 and sell it today you would earn a total of 15,000 from holding Woorim Machinery Co or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongwoo Farm To vs. Woorim Machinery Co
Performance |
| Timeline |
| Dongwoo Farm To |
| Woorim Machinery |
Dongwoo Farm and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwoo Farm and Woorim Machinery
The main advantage of trading using opposite Dongwoo Farm and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwoo Farm 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.| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Wooyang Co | Dongwoo Farm vs. Asia Seed CoLtd |
| Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Hyundai Motor Co | Woorim Machinery vs. Hyundai Motor |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |