Correlation Between Nasmedia and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Nasmedia 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 Nasmedia and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Woori Technology, you can compare the effects of market volatilities on Nasmedia 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 Nasmedia with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Woori Technology.
Diversification Opportunities for Nasmedia and Woori Technology
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasmedia and Woori is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and Nasmedia 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 Nasmedia 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 Nasmedia i.e., Nasmedia and Woori Technology go up and down completely randomly.
Pair Corralation between Nasmedia and Woori Technology
Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Woori Technology. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 1.93 times less risky than Woori Technology. The stock trades about -0.16 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Woori Technology
Performance |
| Timeline |
| Nasmedia |
| Woori Technology |
Nasmedia and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Woori Technology
The main advantage of trading using opposite Nasmedia and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia 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 Nasmedia 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.| Woori Technology vs. Korea Real Estate | Woori Technology vs. Korea Ratings Co | Woori Technology vs. IQuest Co | Woori Technology vs. Wonbang Tech Co |
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.
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