Correlation Between Woorim Machinery and DB HiTek
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and DB HiTek 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 Woorim Machinery and DB HiTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woorim Machinery Co and DB HiTek Co, you can compare the effects of market volatilities on Woorim Machinery and DB HiTek 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 Woorim Machinery with a short position of DB HiTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and DB HiTek.
Diversification Opportunities for Woorim Machinery and DB HiTek
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woorim and 000990 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and DB HiTek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB HiTek and Woorim Machinery 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 Woorim Machinery Co are associated (or correlated) with DB HiTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB HiTek has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and DB HiTek go up and down completely randomly.
Pair Corralation between Woorim Machinery and DB HiTek
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.51 times more return on investment than DB HiTek. However, Woorim Machinery is 1.51 times more volatile than DB HiTek Co. It trades about 0.26 of its potential returns per unit of risk. DB HiTek Co is currently generating about -0.02 per unit of risk. If you would invest 476,000 in Woorim Machinery Co on October 25, 2024 and sell it today you would earn a total of 82,000 from holding Woorim Machinery Co or generate 17.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. DB HiTek Co
Performance |
| Timeline |
| Woorim Machinery |
| DB HiTek |
Woorim Machinery and DB HiTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and DB HiTek
The main advantage of trading using opposite Woorim Machinery and DB HiTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, DB HiTek 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 DB HiTek will offset losses from the drop in DB HiTek's long position.| Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. Samsung Electronics Co | Woorim Machinery vs. KB Financial Group | Woorim Machinery vs. Shinhan Financial Group |
| DB HiTek vs. Samyang Foods Co | DB HiTek vs. Digital Imaging Technology | DB HiTek vs. Daelim Trading Co | DB HiTek vs. DB Financial Investment |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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