Correlation Between Woorim Machinery and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Woorim Machinery and GS Engineering 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 GS Engineering 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 GS Engineering Construction, you can compare the effects of market volatilities on Woorim Machinery and GS Engineering 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 GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woorim Machinery and GS Engineering.
Diversification Opportunities for Woorim Machinery and GS Engineering
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Woorim and 006360 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Woorim Machinery Co and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const 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 GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Woorim Machinery i.e., Woorim Machinery and GS Engineering go up and down completely randomly.
Pair Corralation between Woorim Machinery and GS Engineering
Assuming the 90 days trading horizon Woorim Machinery Co is expected to generate 1.31 times more return on investment than GS Engineering. However, Woorim Machinery is 1.31 times more volatile than GS Engineering Construction. It trades about 0.05 of its potential returns per unit of risk. GS Engineering Construction is currently generating about 0.04 per unit of risk. If you would invest 516,000 in Woorim Machinery Co on August 27, 2024 and sell it today you would earn a total of 11,000 from holding Woorim Machinery Co or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woorim Machinery Co vs. GS Engineering Construction
Performance |
| Timeline |
| Woorim Machinery |
| GS Engineering Const |
Woorim Machinery and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woorim Machinery and GS Engineering
The main advantage of trading using opposite Woorim Machinery and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woorim Machinery position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.| Woorim Machinery vs. LAKE MATERIALS LTD | Woorim Machinery vs. Top Material Co | Woorim Machinery vs. National Plastic Co | Woorim Machinery vs. Lake Materials Co |
| GS Engineering vs. Hanmi Semiconductor Co | GS Engineering vs. Netmarble Games Corp | GS Engineering vs. Kakao Games Corp | GS Engineering vs. Sam Yang Foods |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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