Correlation Between Woorim Machinery and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co, you can compare the effects of market volatilities on Woorim Machinery and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and Samsung Electronics.
Diversification Opportunities for Woorim Machinery and Samsung Electronics
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Woorim and Samsung is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and Samsung Electronics go up and down completely randomly.
Pair Corralation between Woorim Machinery and Samsung Electronics
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.88 times more return on investment than Samsung Electronics. However, Woorim Machinery is 1.88 times more volatile than Samsung Electronics Co. It trades about 0.01 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.04 per unit of risk. If you would invest 571,199 in Woorim Machinery Co on September 1, 2024 and sell it today you would lose (58,199) from holding Woorim Machinery Co or give up 10.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. Samsung Electronics Co
Performance |
| Timeline |
| Woorim Machinery |
| Samsung Electronics |
Woorim Machinery and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and Samsung Electronics
The main advantage of trading using opposite Woorim Machinery and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Woorim Machinery vs. Lion Chemtech Co | Woorim Machinery vs. CJ Seafood Corp | Woorim Machinery vs. Shinsegae Food | Woorim Machinery vs. Foodnamoo |
| Samsung Electronics vs. Konan Technology | Samsung Electronics vs. Orbitech Co | Samsung Electronics vs. Netmarble Games Corp | Samsung Electronics vs. Golden Bridge 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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