Correlation Between ENERGYMACHINERY KOREA and Woori Technology
Can any of the company-specific risk be diversified away by investing in both ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA and Woori Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENERGYMACHINERY KOREA CoLtd and Woori Technology, you can compare the effects of market volatilities on ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA with a short position of Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENERGYMACHINERY KOREA and Woori Technology.
Diversification Opportunities for ENERGYMACHINERY KOREA and Woori Technology
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between ENERGYMACHINERY and Woori is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd 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 ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Woori Technology go up and down completely randomly.
Pair Corralation between ENERGYMACHINERY KOREA and Woori Technology
Assuming the 90 days trading horizon ENERGYMACHINERY KOREA is expected to generate 24.02 times less return on investment than Woori Technology. But when comparing it to its historical volatility, ENERGYMACHINERY KOREA CoLtd is 1.77 times less risky than Woori Technology. It trades about 0.03 of its potential returns per unit of risk. Woori Technology is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 170,500 in Woori Technology on November 4, 2024 and sell it today you would earn a total of 38,000 from holding Woori Technology or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENERGYMACHINERY KOREA CoLtd vs. Woori Technology
Performance |
| Timeline |
| ENERGYMACHINERY KOREA |
| Woori Technology |
ENERGYMACHINERY KOREA and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENERGYMACHINERY KOREA and Woori Technology
The main advantage of trading using opposite ENERGYMACHINERY KOREA and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA 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.| ENERGYMACHINERY KOREA vs. DSC Investment | ENERGYMACHINERY KOREA vs. Woori Technology | ENERGYMACHINERY KOREA vs. TS Investment Corp | ENERGYMACHINERY KOREA vs. Stic Investments |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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